Firm Performance, Business Supports and Zombification over the Pandemic
January 31, 2025
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Summary
Did the COVID-19 pandemic zombify the economy? Commentators have pointed to the pandemic and related business support measures potentially fueling zombification. Using administrative data covering the universe of Canadian firms, we find a broad-based decline in the share of zombie firms across industries relative to pre-pandemic levels. Whereas business support measures kept firms alive and operating as non-zombie firms, the decline in the zombie firm share was caused by would-be zombie firms exiting, indicative of the pandemic’s cleansing effects. As a consequence, while aggregate labour productivity worsened in Canada over the pandemic, it was not driven by zombie firms.
Subject: COVID-19, Employment, Health, Labor, National accounts, Production, Productivity
Keywords: Aggregate Productivity, business support measure, cleansing effect, COVID-19, COVID-19 Pandemic, Employment, Europe, exit component, firm performance, Productivity, zombie firm, Zombie Firms
Pages:
40
Volume:
2025
DOI:
Issue:
029
Series:
Working Paper No. 2025/029
Stock No:
WPIEA2025029
ISBN:
9798400298776
ISSN:
1018-5941
