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The High Cost of PPP Jobs

Summary:
Economists have begun to study the effects of the Paycheck Protection Program, on which Congress spent about half a trillion dollars. The results so far do not look good. Chetty et al. write:We therefore conclude that the PPP had little material impact on employment at small businesses: we cannot rule out a small positive employment effect of the program (of e.g., 3-4 pp on employment rates), but it is clear that the program did not restore the vast majority of jobs that were lost following the COVID shock.The study by Autor et al. has a more positive tone. But notice this sentence, deep in the bowels of the paper:Our benchmark estimates imply that each job supported by the PPP cost between 2K and 1K through May 2020, with our preferred employment estimate implying a cost of

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Economists have begun to study the effects of the Paycheck Protection Program, on which Congress spent about half a trillion dollars. The results so far do not look good. Chetty et al. write:
We therefore conclude that the PPP had little material impact on employment at small businesses: we cannot rule out a small positive employment effect of the program (of e.g., 3-4 pp on employment rates), but it is clear that the program did not restore the vast majority of jobs that were lost following the COVID shock.
The study by Autor et al. has a more positive tone. But notice this sentence, deep in the bowels of the paper:
Our benchmark estimates imply that each job supported by the PPP cost between $162K and $381K through May 2020, with our preferred employment estimate implying a cost of $224K per job supported.
This estimate of cost per job suggests that the program was not a good use of public funds. I am not surprised. That is why, early on, I suggested that fiscal responses should focus on helping people rather than propping up businesses, as in this proposal of mine.
Greg Mankiw
I am the Robert M. Beren Professor of Economics at Harvard University, where I teach introductory economics (ec 10). I use this blog to keep in touch with my current and former students. Teachers and students at other schools, as well as others interested in economic issues, are welcome to use this resource.

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