Covid-19 and small firms: expectations, relief take-up and firm dynamics

Many small businesses have already been deeply affected by the Covid-19 crisis, leading them to lay off employees, temporarily close shop, or go out of business completely. In response, governments have passed specific provisions to help support small businesses as part of large aid packages. Yet, many small businesses may not understand who is eligible for aid, or how to apply. This project evaluates the roles of information frictions on small businesses’ utilization of newly available government assistance. To begin, we survey small businesses in the United States and Latin America about how they have been affected by the Covid-19 crisis. Next, we randomly assign small businesses to informational interventions with different levels of intensity. Businesses will then be followed-up to see if they successfully applied for aid, and how the aid affected layoffs and expectations of going out of business. Using the experimental design, we will study the role of information frictions on differences in applying for aid by firm size, and how that aid affects business survival.