Productivity and Firm Exit during the COVID-19 Crisis : Cross-Country Evidence
This paper examines whether the economic crisis induced by the COVID-19 pandemic exhibits a Schumpeterian “cleansing” of less productive firms. Using firm-level data for 31 economies, the study finds that less productive firms have a higher probabi...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/267581621869749674/Productivity-and-Firm-Exit-during-the-COVID-19-Crisis-Cross-Country-Evidence http://hdl.handle.net/10986/35632 |
| Summary: | This paper examines whether the economic
crisis induced by the COVID-19 pandemic exhibits a
Schumpeterian “cleansing” of less productive firms. Using
firm-level data for 31 economies, the study finds that less
productive firms have a higher probability of permanently
closing during the crisis, suggesting that the process of
cleansing out unproductive arrangements may be at work. The
paper also uncovers a strong and negative relationship
between firm exit and innovation and digital presence,
especially for small firms, confirming the relevance of the
ability to adapt to market conditions as a determinant of
firm survival. Finally, the study finds evidence of a
negative relationship between firm exit and a burdensome
business environment, as well as between firm exit and age. |
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