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EVALUATING THE ROLE OF THE PAYCHECK PROTECTION PROGRAM IN COUNTY-LEVEL ECONOMIC MAINTENANCE: A PANEL DATA SET ANALYSIS OF THE U.S. GOVERNMENT’S ECONOMIC RECOVERY INITIATIVE IN RESPONSE TO THE COVID-19 PANDEMIC

Abstract
This study evaluated the impact of the Paycheck Protection Program (PPP) on economic maintenance (employment) and recovery across counties during the COVID-19 pandemic (2020–2023). Local, state, and federal governments often face the challenge of providing their citizens with economic opportunities, safety, security, well-being, and education, attracting business investment, minimizing poverty, and ensuring the availability of adequate food and water. Economic conditions are affected by major external shocks such as pandemics, recessions, and supply chain problems. These broader challenges increase the pressure on governments at all levels and have caused them to develop innovative ways of crafting and implementing policies that bring value to the public (Cellucci & Grove, 2011). The need for public-private partnerships became critical during the COVID-19 pandemic, which forced local, state, and federal governments to collaborate with private-sector stakeholders to leverage resources such as masks and ventilators to keep their citizens safe.

In 2020, the U.S. federal government entered an arrangement with banks to provide PPP loans to businesses that met the application criteria. Loans to businesses that maintained their employees on their payrolls during the COVID-19 pandemic were forgiven. The government measured the effectiveness of the PPP loans based on the ability of the recipients to keep their employees on the payroll. The aim of this study was to answer pivotal research questions concerning (1) the influence of the PPP on county-level economic maintenance during the pandemic and (2) the extent to which the effects of the PPP differed between economically advantaged and disadvantaged counties. Following Myrdal (1957) and Fujita (2007), the primary argument of this study is that the implementation of economic stimulus programs such as the PPP during the pandemic contributed to county-level economic maintenance (employment), but that these programs failed to achieve county-level economic convergence. “Economic convergence” in this study refers to less wealthy counties achieving economic maintenance comparable to that of wealthier counties. Thus, a further argument presented in this study is that the PPP led to absolute economic divergence at the county level. “County-level economic divergence” in this study refers to economic disparities between less wealthy and more wealthy counties, with the latter achieving better economic maintenance than the former.

This study was guided by the critical hypothesis that the PPP had a stronger positive impact on employment recovery in economically advantaged counties than in disadvantaged counties, consistent with cumulative causation dynamics. A quantitative panel data and comparative analysis approach served to evaluate the PPP and, in particular, its role in facilitating county-level economic maintenance. The dependent variable was county employment, and the independent variable was the number of PPP loans forgiven in a county. The unique contribution of this study to public administration and policy literature is the focus on the use of a government economic intervention program for county-level economic development.