layout: true <div class="my-footer"><span>Galanakis, Hobbs & Savagar (2021) • The impact of "Eat Out to Help Out" on firm creation</span></div> <!-- this adds the link footer to all slides, depends on my-footer class in css--> --- name: xaringan-title class: left, middle # The impact of "Eat Out to Help Out" on firm creation .large[**Yannis Galanakis**, Jonathan Hobbs and Anthony Savagar <br> <span style = 'font-size: 75%;'> University of Kent</span> <br> <br> December 2021 ] .pull-left[ ] .pull-right[
<i.galanakis@kent.ac.uk> <br>
[@YannisGalanakis](https://twitter.com/YannisGalanakis) <br>
[ygalanak](http://github.com/ygalanak)
Job Market Candidate ] --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> COVID-19 in the UK * Hard hit from the pandemic * Measures to alleviate the economic impact of COVID-19 - Coronavirus Job Retention scheme - Self-Employment Income Support Scheme (SEISS) - Bounce Back Loan Scheme (BBLS) and - Coronavirus Business Interruption Loan Scheme (CBILS) * <span style = 'color:#8FBCBB;'>July 2020:</span> Accommodation and food services - temporary VAT cut to food and non-alcoholic drinks - "Eat Out to Help Out" --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Eat Out to Help Out .pull-left[ * Aim - support 130,000 businesses and 1.8 million jobs by encouraging consumers to eat-out * Eligibility - UK establishments - licensed to sell food on or before <span style = 'color:#8FBCBB;'>July 7th</span> * Subsidy - 50% discount on food and non-alcoholic drinks up to £10 per diner - Mon, Tue and Wed ] .pull-right[ <img src="index_files/figure-html/unnamed-chunk-1-1.png" width="75%" style="display: block; margin: auto;" /> ] --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Eat Out to Help Out (II) * Controversial policy: - Fetzer (2020): Subsidise COVID-19 cases - González-Pampillón et al.(2021): `\(\uparrow\)` recruitment in hospitality * Our paper: <span style = 'color:#8FBCBB;'>Question:</span> *What* is the effect of EOTHO on firm creation? <span style = 'color:#8FBCBB;'>Findings:</span> 1. Geographic spillover 2. Signalling: positive effect on expectations 3. 6.3% increase in business incorporations --- name: data # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Data - 2 sources: 1. Companies House register ("Basic Company data") > - active companies > - date of registration > - 5-digit SIC code > - postcode 2. HMRC list of participants in EOTHO > - Name > - postcode .content-box-green[<span style = 'font-size: 60%;'>
[Summary Statistics](#summaryStats)</span> ] --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Methodology - `\(H_0\)`: EOTHO has *no* effect on firm creation - Compare the number of new registrations in EOTHO postcodes against all postcodes - Postcodes: e.g. CT2 7FS - Descriptive effect: `$$\text{Effect}= \left(\frac{\# \text{ of registrations 2020}}{\# \text{ of registrations 2019}}\right)^{\text{EO2HO postcodes}} - \left(\frac{\# \text{ of registrations 2020}}{\# \text{ of registrations 2019}}\right)^{\text{all postcodes}}$$` - ID: > <span style = 'color:#8FBCBB;'>Treated:</span> businesses if in the same postcode there is at least one EOTHO participating outlet --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Difference-in-Differences I - Since not all eligible restaurants in a certain postcode participated in the scheme, we depend on the: 1. timing of the announcement of the policy and 2. postcodes of business registrations --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Difference-in-Differences II - Our regression line: <small> `$$\begin{aligned} \ln \left(\text{registrations} \right)_{k,w,j} = &\beta_1 \text{EOTHO postcode}_{k,w,j} + \beta_2 \text{EOTHO period}_{w} \\ &+ \beta_3 \left(\text{EOTHO postcode}_{k,w,j} \times \text{EOTHO period}_{w} \right) \\ &+ \eta_w +\gamma_k + \delta_j + (\eta_w \times \gamma_k) + (\eta_w \times \delta_j) + (\delta_j \times \gamma_k) \\ &+ (\eta_w \times \delta_j \times \gamma_k) + \varphi T_{t,j} + \vartheta (\chi_i \times \eta_w) + u_{k,w,j} \end{aligned}$$` </small> - `\(\eta_w\)`: week FE - `\(\gamma_k\)`: regional FE - `\(\delta_j\)`: sector FE - `\(T_{t,j}\)`: linear pre-treatment trend of company registrations for each NUTS3 region - `\(\chi_i\)`: natural log of total population in district `\(i\)` --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Difference-in-Differences III <img src="index_files/figure-html/unnamed-chunk-2-1.png" width="40%" style="display: block; margin: auto;" /> --- class: center, middle # Results --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Descriptive result .pull-left[ - Incorporations were on average higher than in 2019 - positive spillover effect ] .pull-right[ <img src="index_files/figure-html/unnamed-chunk-3-1.png" width="75%" style="display: block; margin: auto;" /> ] --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Spillover effect by sector .pull-left[ - EOTHO did not affect all sectors equally - “Transportation and storage" - This started before the announcement - unlikely to be a direct result from EOTHO - Other services and Health (dental practices): Why? - location of practices - less urban areas: geographical spillover ] .pull-right[ <img src="index_files/figure-html/unnamed-chunk-4-1.png" width="75%" style="display: block; margin: auto;" /> ] --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Diff-in-Diff
(1)
(2)
(3)
(4)
EOTHO
0.0563 ***
0.0563 ***
0.0561 ***
0.0561 ***
(0.0018)
(0.0018)
(0.0018)
(0.0018)
EOTHOperiod:EOTHO
0.0070 **
0.0069 **
0.0068 **
0.0068 **
(0.0033)
(0.0033)
(0.0033)
(0.0033)
Dep. variable: natural log of the company registrations.
Baseline fixed effects refer to fixed effect for the week, NUTS3, 2-digit SIC code and their interaction.
Robust standard errors in parentheses.
*** p < 0.01; ** p < 0.05; * p < 0.1.
Specifications (2) and (4) include a linear pre-treatment trend. Specifications (3) and (4) control for the natural log of total population in district level interacted with week dummies.
--- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Robustness check: Google trends .pull-left[ - High-street businesses benefit the most from EOTHO - If true, the willingness to set up such a business should be high - Google trends: "How to set up a beauty salon?" - a day after the EOTHO announcement searches peak ] .pull-right[ <img src="index_files/figure-html/unnamed-chunk-6-1.png" width="75%" style="display: block; margin: auto;" /> ] --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Mechanisms 1. Geographic spillover: use EOTHO establishment and nearby amenities 2. Fiscal multiplier: workers in EOTHO observe an increase in their income due to EOTHO - If it was right, we would have seen a blanket increase of firm creation 3. Signalling: positive effect on expectations 4. Other anti-COVID-19 policies - EOTHO locations: no blanket policies studied - Diff-in-diff: controls for time-variant trends across locations --- # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Conclusion - The policy announcement had a stronger effect than its subsequent implementation - 2,792 companies were created in non-hospitality sectors or 1.3 companies daily - ‘Other service activities’: significant geographic and signalling effects --- class: inverse background-image: url(img/Kent_Economics_White.svg) background-size: 260px background-position: 5% 95% # Thank you! .pull-right[.pull-down[ <a href="mailto:i.galanakis@kent.ac.uk"> .white[
i.galanakis@kent.ac.uk] </a> <a href="https://www.yannisgalanakis.com/jmp/"> .white[
yannisgalanakis.com/jmp] </a> <a href="https://ygalanakis.shinyapps.io/appJMP"> .white[
ygalanakis.shinyapps.io/appJMP] </a> <a href="http://twitter.com/YannisGalanakis"> .white[
@YannisGalanakis] </a> <a href="http://github.com/ygalanak"> .white[
@ygalanak] </a> <br><br><br> ]] --- name: summaryStats # <span style = 'color:#D8DEE9; font-size: 60%;'>
</span> Summary Statistics <table class=" lightable-paper lightable-striped table" style='font-family: "Arial Narrow", arial, helvetica, sans-serif; margin-left: auto; margin-right: auto; font-size: 14px; margin-left: auto; margin-right: auto;'> <thead> <tr> <th style="empty-cells: hide;" colspan="1"></th> <th style="padding-bottom:0; padding-left:3px;padding-right:3px;text-align: center; color: white !important;padding-right: 4px; padding-left: 4px; background-color: #3B4252 !important;" colspan="3"><div style="TRUE">Pre-announcement</div></th> <th style="padding-bottom:0; padding-left:3px;padding-right:3px;text-align: center; color: white !important;padding-right: 4px; padding-left: 4px; background-color: #3B4252 !important;" colspan="3"><div style="TRUE">Post-announcement</div></th> </tr> <tr> <th style="empty-cells: hide;" colspan="1"></th> <th style="padding-bottom:0; padding-left:3px;padding-right:3px;text-align: center; color: white !important;padding-right: 4px; padding-left: 4px; background-color: #3B4252 !important;" colspan="3"><div style="TRUE">(2020-06-01--2020-07-07)</div></th> <th style="padding-bottom:0; padding-left:3px;padding-right:3px;text-align: center; color: white !important;padding-right: 4px; padding-left: 4px; background-color: #3B4252 !important;" colspan="3"><div style="TRUE">(2020-07-08--2020-08-31)</div></th> </tr> <tr> <th style="text-align:left;color: white !important;background-color: #3B4252 !important;"> X </th> <th style="text-align:left;color: white !important;background-color: #3B4252 !important;"> EOTHO </th> <th style="text-align:left;color: white !important;background-color: #3B4252 !important;"> non.EOTHO </th> <th style="text-align:left;color: white !important;background-color: #3B4252 !important;"> Total </th> <th style="text-align:left;color: white !important;background-color: #3B4252 !important;"> EOTHO.1 </th> <th style="text-align:left;color: white !important;background-color: #3B4252 !important;"> non.EOTHO.1 </th> <th style="text-align:left;color: white !important;background-color: #3B4252 !important;"> Total.1 </th> </tr> </thead> <tbody> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> Mean (s.d) of weekly hospitality registrations </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 281.5 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 860.8 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1142.3 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 266.3 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 832.9 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1099.1 </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (45.1) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (96.7) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (133.5) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (28.7) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (61.7) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (82.4) </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> Mean (s.d.) of weekly ratio of hospitality registrations </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.09 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.35 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.28 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.17 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.48 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.39 </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.130) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.141) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.11) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.094) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.142) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.08) </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> Mean (s.d) of weekly non-hospitality registrations </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 2614.8 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 14131.3 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 16746.1 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 2486 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 13016.4 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 15502.4 </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (396.3) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (1718.7) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (2103.7) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (204.8) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (1032.9) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (1213.4) </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> Mean (s.d.) of weekly ratio of non-hospitality registrations </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.61 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.39 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.42 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.62 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.36 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 1.4 </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.140) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.107) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.11) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.147) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.101) </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> (0.103) </td> </tr> <tr> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> Number of (unique) postcodes </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 47702 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 80963 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 128665 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 47702 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 80963 </td> <td style="text-align:left;color: white !important;background-color: #3B4252 !important;"> 128665 </td> </tr> </tbody> </table> .content-box-green[<span style = 'font-size: 60%;'>
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