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When Should Public Programs Be Privately Administered? Theory and Evidence from the Paycheck Protection Program

Alexander W. Bartik¹; Zoë Cullen²; Edward L. Glaeser³; Michael Luca⁴; Christopher Stanton⁵; Adi Sunderam⁶

¹ University of Illinois [email protected] · ² Harvard Business School [email protected] · ³ Harvard Department of Economics [email protected] · ⁴ Johns Hopkins University [email protected] · ⁵ Harvard Business School [email protected] · ⁶ Harvard Business School [email protected]

When should private companies allocate public resources? In our model, delegation is attractive when delay is costly, the impact of funds is similar across firms, and government and private objectives are aligned. We use novel firm-level survey data to measure heterogeneity in the impact of the Paycheck Protection Program and to assess whether banks targeted loans to high-impact firms. Banks did target loans to their most valuable pre-existing customers. However, we find that treatment effect heterogeneity is moderate, suggesting that delegation was likely superior from the government’s perspective to delaying loans to improve targeting.

DOI

10.1162/rest.a.1626

Pages

1-45

Language

en

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