Future of work

This study compares the characteristics of businesses that closed in September and November of 2020 with those closed in February 2020 to estimate the risk of business closure due to COVID 19. It uses new linked administrative data on business closures and past financial positions to estimate how business characteristics impact closures. It finds that businesses that closed in the early stages of the pandemic were likely to have a higher estimated risk of closure compared to those closed later in the year. Such businesses were more likely to be new entrants, have a smaller number of employees, less assets, more debt, lower liquidity, and less profitability compared to businesses closed in September and November 2020. It also finds that the rate of business closure diminishes over time. In the first two months of the pandemic (February and March) business closure was above 20% but slowed to 5% by August and by September 2020 the rate increased to about 13%. The findings suggest that businesses with stronger financial positions may be at risk of closure as the pandemic continues.