The Impact of Covid-19 on Productivity

49 Pages Posted: 23 Dec 2020 Last revised: 16 Feb 2022

See all articles by Nicholas Bloom

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Phillip Bunn

Bank of England

Paul Mizen

University of Nottingham; Bank of England; Centre for Economic Policy Research (CEPR)

Pawel Smietanka

Deutsche Bundesbank

Greg Thwaites

University of Nottingham

Multiple version iconThere are 2 versions of this paper

Date Written: December 21, 2020

Abstract

We analyse the impact of Covid-19 on productivity using data from an innovative monthly firm survey panel that asks for quantitative impacts of Covid on inputs and outputs. We find total factor productivity (TFP) fell by up to 5% during 2020–21. The overall impact combined large reductions in ‘within-firm’ productivity, with an offsetting positive ‘between-firm’ effects as less productive sectors, and less productive firms within them, contracted. Despite these large pandemic effects, firms’ post-Covid forecasts imply surprisingly little lasting impact on aggregate TFP. We also see significant heterogeneity over firms and sectors, with the greatest impacts in those requiring extensive in-person activity. We also ask about unmeasured inflation in the form of deteriorating product quality, finding an additional 1.3% negative impact on TFP.

Keywords: Productivity, reallocation, Covid-19, growth

JEL Classification: C83, D24, D84, E24, E32, O47

Suggested Citation

Bloom, Nicholas and Bunn, Phillip and Mizen, Paul and Smietanka, Pawel and Thwaites, Greg, The Impact of Covid-19 on Productivity (December 21, 2020). Bank of England Working Paper No. 900, Available at SSRN: https://ssrn.com/abstract=3753742 or http://dx.doi.org/10.2139/ssrn.3753742

Nicholas Bloom (Contact Author)

Stanford University - Department of Economics ( email )

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HOME PAGE: http://economics.stanford.edu/faculty/bloom

National Bureau of Economic Research (NBER) ( email )

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Phillip Bunn

Bank of England ( email )

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Paul Mizen

University of Nottingham ( email )

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Bank of England

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Centre for Economic Policy Research (CEPR)

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Pawel Smietanka

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Greg Thwaites

University of Nottingham

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