Simulating the Impact of COVID-19 on Formal Firms in South Africa
This note uses administrative tax data for formal firms to measure the direct impact of lockdown restrictions on firms’ profitability, employment, and exit rates. The authors separate the economy into three categories, according to the size of the...
Main Authors: | , , |
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Format: | Brief |
Language: | English |
Published: |
World Bank, Washington, DC
2021
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Subjects: | |
Online Access: | http://documents.worldbank.org/curated/en/434821610951466843/Simulating-the-Impact-of-COVID-19-on-Formal-Firms-in-South-Africa http://hdl.handle.net/10986/35052 |
Summary: | This note uses administrative tax data
for formal firms to measure the direct impact of lockdown
restrictions on firms’ profitability, employment, and exit
rates. The authors separate the economy into three
categories, according to the size of the shock experienced,
and consider two lockdown scenarios: one lasting three
months and one lasting five months. These scenarios are
clearly stylized and they do not necessarily reflect the
reality of any country. They are, however, not too distant
from the South African reality, where an initial strict
lockdown was imposed for two months, followed by several
months of easing restrictions and reduced eco-nomic
activity. The authors estimate losses to corporate income
tax (CIT) revenue, increases in firms’ debt levels, cuts in
employment and their mitigation through wage subsidies, and
aggregate output losses from firms’ exit. |
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