The impact of Covid-19 on productivity

Staff working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 21 December 2020

Staff Working Paper No. 900

By Nicholas Bloom, Philip Bunn,Paul Mizen, Pawel Smietanka and Gregory Thwaites

We analyse the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted CEOs’ time spent on dealing with the pandemic.

The impact of Covid-19 on productivity

September 2021

This is an updated version of the Staff Working Paper originally published on 21 December 2020.

The impact of Covid-19 on productivity - September 2021

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