Abstract:
This paper uses data on private firms in 24 developing countries to show that, during the COVID-19 pandemic, firms with greater obstacles in accessing an educated workforce have lower performance than other firms. The findings are robust to the comprehensive inclusion of relevant control variables and to a number of sensitivity tests. For instance, the paper shows that the alternate measures of performance (capacity utilization, layoffs, cash flows, and ability to meet obligations) are also negatively affected by a firm's inability to access educated workforce. We argue that the impact of an educated workforce on performance is through higher productivity, lower costs, increased innovation, and efficient decision making. Our findings also show that firms with greater obstacles in an accessing educated workforce did not use the government support programs efficiently during the COVID-19 pandemic.
