Commercial Eviction Moratoria, Liquidity Relief and Business Closure
In this paper, I estimate the effects of the commercial eviction moratorium (CEM) policy on business closure and employment during the Covid-19 pandemic. CEM temporarily prohibits commercial evictions and gives business tenants more time to pay rent, thereby providing liquidity relief. I construct an instrument for CEM using pre-pandemic partisanship and controlling for alternative channels through which partisanship may affect businesses. I find that CEM significantly reduces business closure in the short run in both retail and food services but has long-run effects only in food services. Consistent with the mechanism that CEM provides liquidity relief, CEM is more effective in reducing long-run closure for businesses that are more solvent coming into the pandemic, and CEM reduces business take-up of costly loans but does not affect take-up of grants. Turning to employment, the impact of CEM operates along an extensive margin through a reduction in business closure, rather than along an intensive margin through a change in employment while a business is in operation. The total impact of CEM on employment is a preservation of 0.98 percentage points of pre-pandemic employment, which equals 39% of the estimated effects of the Paycheck Protection Program.