Studies in this week Gathering of Hutchins find that PPP loans increase businesses’ chances of survival, but don’t always reach the right businesses, charter schools improve the quality of the traditional public school workforce, and more.
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In response to the pandemic, the federal government has offered up to $ 649 billion in government-guaranteed Paycheck Protection Program (P3) loans through commercial banks to small and medium-sized businesses. Leaving loan administration to the banks allowed for a faster transfer of funding, but did the banks distribute loans to businesses that needed it most? Using company-level survey data from the Alignable Network, Alexander Bartik of the University of Illinois at Urbana-Champaign and his coauthors find that Approval of PPP loans increased the probability of survival of businesses by 14 to 30 percentage points and also boosted employment, although this effect is imprecisely measured. In some respects, including the size of the payroll, banks appeared to target business loans that could have failed without the cash injection. But companies that reported larger revenue losses from the pandemic and lower cash savings were less likely to be approved for a loan, despite larger positive impacts when they received funding. Some banks seem to have given priority to companies with closer relationships with the bank and those with better financial standing, perhaps passing over companies that would have benefited more from the program.
Using data from public charter and traditional schools in the Massachusetts Department of Elementary and Secondary Education, Jesse M. Bruhn in Brown, Marcus A. Winters in Boston, and Scott A. Imberman in Michigan State track the movement of teachers between and within charter and traditional schools. public schools during their first seven years. They find that charter schools are more likely than traditional public schools to lose both their poorest and top performing teachers. What’s more, low-performing teachers are more likely to leave the profession altogether while high-performing teachers are more likely to switch from charters to traditional public schools where job protections are stronger and wages higher. Additionally, their data shows that the likelihood of a charter school teacher moving to a traditional public school increases dramatically once licensed, a standard almost always required by traditional public schools. The authors conclude that charter schools offer potential teachers who are not accredited a low cost, low barrier avenue to test their liking and suitability for teaching, and by triage of teachers, charter schools increase the size and quality of traditional public schools. labor pool.
While some economists argue that Unemployment Insurance (UI) can prolong unemployment by causing job seekers to make less effort in the job search, Ammar Farooq at Uber Technologies, Adriana D. Kugler and Umberto Muratori in Georgetown find that extending unemployment insurance benefits during recessions enables job seekers to seek better employment. Using employer and employee-level data from the Longitudinal Employer-Household Dynamics survey and household-level data from the Current Population Survey, the authors rank each employee and job according to salary, quality and educational or educational requirements. Focusing on the Great Recession, they find that a 53-week increase in UI benefit duration increases wages between 2.6% and 4.4%, increases the similarity between job quality rankings workers and businesses by 1.1% and increases the likelihood of workers ending up in a job. with the higher education requirements of 14.4%. The authors argue that since there is no evidence that recessions affect the skill requirements of companies, workers find jobs that better match their education. These effects are greater for women, non-whites, and less educated workers.
“The course of the economy will depend on the evolution of the virus and mitigation efforts … [M]The basic view is that we’re going to bounce back in Q3 data, but it will be some time before we get back to the activity level we had in February before the pandemic hits …. We could get back to the activity level [we had before the pandemic] maybe by the end of 2021, but there’s a lot of moving parts here with the virus and the global outlook, so I think there’s a pretty big margin of uncertainty. I think economic activity started to pick up in May and June and my personal forecast is that this will continue for the second half of the year … [But] the longer it drags on, the greater the risk of long-term damage to the economy. I don’t think we’re there yet. says Richard Clarida, vice chairman of the Federal Reserve.
“At our July meeting, we discussed our review of the framework… The committee recognizes that today’s world is very different from 2012, the last time the Fed did a serious review. In particular, there are very powerful global disinflationary forces and there are also very powerful forces that are keeping global rates down. If you put these two together, it suggests that there might be ways to define our strategy so that we are better able to meet our targets for maximum employment and price stability… We are certainly looking at some important developments in our strategy from our existing strategy.