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Title: Small Business and the COVID-19 Pandemic: The Role of Work from Home

Citation Type: Miscellaneous

Publication Year: 2020

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Abstract: Work from home (WFH) becomes the new norm in the COVID-19 pandemic. Whether the WFH norm will fade or accelerate after the stay-at-home mandate ends is unknown. The study builds a theoretical framework based on utility maximization theory subject to a “contagion” agglomeration parameter and argues that WFH is a rational choice for small businesses. We compiled an up-to-date real-time daily and weekly multifaceted data set tracking WFH propensity from March 20 through July 28. Our empirical analysis estimated a variety of fixed-effects panel data models, populationaveraged generalized linear panel-data models with the generalized estimating equation (GEE) approach, and two-level mixed-effects panel-data models. After controlling for the local pandemic, economic, and demographic factors, we find that, (1) after the stay-at-home order ended, WFH rate got higher; (2) small businesses in states with higher WFH rate are more likely to have higher increases in operating revenue, better cash flow and lower chances of temporary closure. Our robust empirics confirm our theory and hypotheses and demonstrate WFH as a potential force that expedited the “creative destruction” into a new efficient work paradigm.

Url: https://assets.researchsquare.com/files/rs-83264/v1_stamped.pdf?c=1601389053

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Authors: Zhang, Ting; Gerlowski, Merrick; Acs, Zoltan

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Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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