Person:

Cullen, Zoe

The COVID‐19 pandemic led to dramatic economic disruptions, including government‐imposed restrictions that temporarily shuttered millions of American businesses. We use a nationwide survey of thousands of small business owners to establish three main facts about business owners’ decisions to reopen at the end of the lockdowns. First, roughly 60 percent of firms planned to reopen within days of the end of legal restrictions, suggesting that the lockdowns were generally binding for businesses—although nearly 30 percent expected to delay their reopening by at least a month. Second, decisions to delay reopenings did not seem to be driven by concerns about employee or customer health; even businesses in high‐proximity sectors with the highest health risks generally reported intentions to reopen as soon as regulations allowed. Third, pessimistic demand projections primarily explain delays among firms that could legally reopen. Owners expected demand to be one‐third lower than before the crisis throughout the pandemic. Using experimentally induced shocks to perceived demand, we find that a 10 percent decline in expected demand results in a 1.5 percentage point (8 percent) increase in the likelihood that firms expected to remain closed for at least one month after being legally able to open. We use follow‐up surveys to cross‐validate expectations with realized outcomes. Overall, our results suggest that governments set more stringent guidelines for reopening than what many businesses would have selected, suggesting that governments may have internalized costs of contagion that businesses did not.

Drawing on surveys of small business owners and employees, we present three main findings about the evolution of remote work after the onset of COVID-19. First, uptake of remote work was abrupt and widespread in jobs suitable for telework according to the task-based measure from Dingel and Neiman (2020). The initial adoption lead to a persistent shift in work arrangements that both firms and workers forecast would continue into the future. Second, business leaders’ perceptions of how remote work affected productivity shifted over time. In early 2020, 70 percent of small business owners reported a productivity dip due to remote work. By contrast, the median business owner reported a positive productivity impact of remote work by 2021. Third, 21 percent of workers report being willing to accept a pay cut in excess of 10 percent if it allowed them to continue working from home, but the median worker in a teleworkable job would not tradeoff any compensation for the option of continued remote work. Taken together, our evidence points to perceived productivity gains and some workers’ preferences as reasons for the persistence of remote work in the years following the onset of COVID-19.