2021, Jonathan Parker, "COVID-19 and the Income and Spending of Small Business Owners"

The COVID-19 pandemic sharply reduced small business revenues in the US and was associated with a decline in the average consumption spending among small business owners. However, the spending decline among owners of businesses that lost nearly all their revenues, such as restaurants, was not much greater than the drop among owners of businesses that were less affected, such as essential service providers. NBER Research Associates Jonathan Parker and Antoinette Schoar and their collaborator Olivia Kim, all of the MIT Sloan School, draw these conclusions after analyzing household-level and business-level financial transactions during the first six months of 2020. They present their findings in a recent working paper (28151). They attribute the small disparities in the spending declines across business owners to a combination of business liquidity at the start of the pandemic, financial support from emergency federal programs, and restrictions on spending opportunities such as travel bans that made it difficult for those who would otherwise have wanted to spend more to do so. Jonathan Parker summarizes these findings in the video below.