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Population mobility, small business closures, and layoffs during the COVID-19 pandemic

Global findings from the Future of Business Survey and Facebook Movement Range Maps

Since the onset of the COVID-19 pandemic, Facebook’s Data for Good Program has been sharing insights with nonprofits, researchers, and public health officials to support the global response. Data for Good shares aggregate statistics on things like whether people are generally staying put in response to stay-at-home policies, as well as perspectives shared from our online community of 150 million businesses about how the pandemic has affected their operations. Using data from several Facebook data sets, we examine the extent to which population mobility influences business outcomes. We find that declines in country-level mobility are heavily correlated with a higher share of small and medium businesses (SMBs) on Facebook reporting layoffs, as well as with the proportion of small businesses having completely closed due to the pandemic.

Data sources

Future of Business Survey

The Future of Business Survey is an ongoing collaboration between Facebook Data for Good, the Organisation for Economic Co-operation and Development (OECD), and the World Bank to survey online small and medium businesses on the Facebook platform about their conditions, challenges, and operations. To provide timely information in response to the COVID-19 outbreak, the Future of Business has shifted to a monthly sampling frame that aims to assess SMBs’ responses to the pandemic in more than 50 countries.

In May, the Future of Business surveyed over 30,000 small businesses around the world and found that, during the pandemic, more than one in four had closed and one in three had laid off workers. In June, we conducted a follow-up survey among 25,000 small business owners and managers and found that as many countries had begun to ease their lockdown restrictions, some businesses were able to resume their in-person operations but nearly one in five (18 percent) businesses remained closed.

Movement Range Maps

Part of Facebook’s Disease Prevention Maps toolkit, Movement Range Maps are intended to inform researchers and public health experts about how populations are responding to physical distancing measures. To analyze how population mobility shifts as stay-at-home orders are put into place, these maps calculate a “change in movement” metric, which looks at how much people are moving around and compares it with a baseline period that predates social distancing measures. This data is derived from people who are using Facebook on a mobile device and who have opted in to the Location History feature. When publishing Movement Range Maps, we aggregate observations to a county level and add random noise to protect privacy.

Analysis

Effects on employment

To compute a weighted average of relative change of mobility for each country, we took the publicly available movement range data by region and divided it by the number of observations in each subnational unit in the country. We then analyzed the correlation between relative changes in mobility and small business layoffs at the country level as reported in the Future of Business for the month of June, examining businesses that reported having been fully closed as well as businesses that remained open. We see that the percent of businesses that laid off employees is correlated with drops in mobility (coefficient = –0.54) and that a higher proportion of small businesses in sub-Saharan Africa and Latin America laid off workers as compared with those in the European region.

To check for robustness, we also fit a simple linear regression, including the region of the country as a fixed effect to see whether the relationship between mobility rates and layoffs remained after controlling for geographic influences. When we control for region, the estimated coefficient of relative mobility remains negative (–0.42) and statistically significant (p < 0.01), suggesting that country-level declines in mobility have a unique and significant effect on small business layoffs even when controlling for a broader set of regional factors.

We then analyzed the correlation between relative changes in mobility during the month of June and small businesses closures. This analysis revealed that countries with the lowest levels of mobility had more businesses closed during the pandemic and countries with higher overall mobility had the fewer closures (coefficient = –0.73).

When we include regional fixed effects, the estimated coefficient of the mobility change was –0.41 and statistically significant (p < 0.001), suggesting that every percentage point drop in mobility in June was associated with a 0.41 percentage point increase in the business closure rates during the pandemic, independent of regional influences.

Conclusion

Analyzing June data from the Future of Business Survey and Movement Range Maps, we find that declines in mobility are strongly correlated with layoffs as well as business closure rates at a country level. These findings suggest that as states, cities, and countries face COVID-19 outbreaks and corresponding lockdowns, small businesses will continue to experience closures and layoffs. As a result, the small business community is likely to continue to need support over the coming year from local and international institutions that are seeking to help business owners mitigate the effects of the pandemic.

Data from this research blog, including the Future of Business Survey and Movement Range Maps, is shared publicly in an effort to better help respond to the COVID-19 pandemic. To access Facebook’s publicly available data sets, please visit our page on Humanitarian Data Exchange.

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