The $800 Billion Paycheck Protection Program: Where Did the Money Go? (NBER Working Paper 29669)
Summary
An NBER Working Paper 29669, “The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did it Go There?” by David Autor, David Cho, Leland D. Crane and co-authors, with an Issue Date of January 2022. The abstract says the PPP provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans, with 93 percent of small businesses ultimately receiving one or more loans. It estimates the program preserved between 2 and 3 million job-years of employment over 14 months at a cost of $170K to $257K per job-year retained. It says about three-quarters of PPP funds accrued to the top quintile of households, and that PPP was essentially untargeted because the United States lacked the administrative infrastructure to do otherwise.
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“The $800 Billion Paycheck Protection Program: Where Did the Money Go? (NBER Working Paper 29669).”
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The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did it Go There? David Autor , David Cho , Leland D. Crane , Mita Goldar , Byron Lutz , Joshua K. Montes , William B. Peterman , David D. Ratner , Daniel Villar Vallenas & Ahu Yildirmaz Working Paper 29669 DOI 10.3386/w29669 Issue Date January 2022 The Paycheck Protection Program (PPP) provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. With 93 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 and 3 million job-years of employment over 14 months at a cost of $170K to $257K per job-year retained. These estimates imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms. Program incidence was highly regressive, with about three-quarters of PPP funds accruing to the top quintile of households. This compares unfavorably to the other two major pandemic aid programs, enhanced UI benefits and Economic Impact Payments (i.e. stimulus checks). PPP’s breakneck scale-up, its high cost per job saved, and its regressive incidence have a common origin: PPP was essentially untargeted because the United States lacked the administrative infrastructure to do otherwise. The more targeted pandemic business aid programs deployed by other high-income countries exemplify what is feasible with better administrative systems. Building similar capacity in the U.S. would enable greatly improved targeting of either employment subsidies or business liquidity when the next pandemic or other large-scale economic emergency occurs, as it surely will. - Copy Citation David Autor, David Cho, Leland D. Crane, Mita Goldar, Byron Lutz, Joshua K. Montes, William B. Peterman, David D. Ratner, Daniel Villar Vallenas, and Ahu Yildirmaz, "The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did it Go There?," NBER Working Paper 29669 (2022), https://doi.org/10.3386/w29669. Download Citation Published Versions David Autor & David Cho & Leland D. Crane & Mita Goldar & Byron Lutz & Joshua Montes & William B. Peterman & David Ratner & Daniel Villar & Ahu Yildirmaz, 2022. " The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did It Go There?, " Journal of Economic Perspectives, vol 36(2), pages 55-80. citation courtesy of Related Topics Macroeconomics Fiscal Policy Public Economics Taxation Labor Economics Labor Compensation COVID-19 Programs Labor Studies Public Economics Projects Healthcare Decision-Making and Outcomes for People Living with Alzheimer's Disease Mentioned in the News Does Gender Impact Retirement Savings? April 19, 2023 Source: Her Money Read the research here and here . Or a non-technical summary here . Millions of PPP Loans Were Flagged as Potentially Fraudulent. Many Were Never Investigated. October 6, 2022 Source: Reason Read the research here . View All More from the NBER In addition to working papers , the NBER disseminates affiliates’ latest findings through a range of free periodicals—the NBER Reporter , the NBER Digest , the Bulletin on Health , the Bulletin on the Economics of Alzheimer's , and the Bulletin on Entrepreneurship —as well as research spotlights, lectures, and panel videos . - Feldstein Lecture - Presenter: Mark Duggan Mark Duggan, who is currently the Wayne and Jodi Cooperman Professor of Economics at Stanford University and will soon... - Methods Lectures Research Associate Melissa Dell of Harvard University and Ashesh Rambachan of MIT delivered the 2026 Methods...
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