There are four new articles available in today's release of Economic and Social Reports.
The percentage of zombie firms declined during the COVID-19 pandemic
Zombie firms are businesses that perform poorly over a long period of time without closing, and studies have shown that they can hurt the growth prospects of healthy firms within the same industry. The article "Did the COVID-19 pandemic zombify the economy? A look at zombie firms," found that following a peak of 7.1% in 2011, the share of zombie firms continued to decline during the pandemic period, reaching a low of 4.4% in 2022.
Overall, from 2019 to 2022, firms had a higher probability of exiting compared with before the pandemic, whether zombie firms (34.4% compared to 28.8%) or non-zombie firms (23.9% compared to 21.2%). Notably, the presence of business supports during the pandemic helped reduce the number of businesses that closed. However, it did so mainly by helping non-zombie firms remain non-zombies and helping zombie firms recover to become non-zombies.
The article also finds that zombie firms played a limited role in the decline in aggregate productivity over the pandemic.
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