Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282733 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16606
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study the impact of COVID-19 on firm performance. Using financial accounts of a large number of German firms, we document that industry affiliation is an important economic dimension of the crisis. Motivated by this fact, we analyze an important industry-specific regulation, system relevance, which allows businesses to remain open in times of lockdown and other restrictions. A difference-in-differences estimation strategy shows that relative revenues of system-relevant firms increase by 6-9 percent and profits by 17-25 percent due to COVID. Controlling for channels that are arguably not driven by the system-relevance regulation, the impact on revenues decreases but remains significant. Overall, results indicate that regulations affecting the ability to operate as well as industry-level shocks play important roles for firm performance during a pandemic-induced crisis.
Subjects: 
system relevance
industry shocks
firm performance
COVID-19
JEL: 
H12
L25
Document Type: 
Working Paper

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