The Impact of Covid-19 on Productivity

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 1.4% negative impact on TFP.

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