COVID-19 Pandemic and Productivity in Perú

This paper examines the impact of the COVID-19 pandemic on productivity among formal firms in Peru using comprehensive administrative data covering the universe of registered firms. To identify the effect of the pandemic, we estimate a firm-level fixed-effects model with year indicators, taking 2019 as the reference year. The results show a large and statistically significant decline in productivity growth in 2020. The contraction in output exceeded the reduction in formal employment and capital, suggesting that productivity operated as the primary margin of adjustment to the sanitary shock. The impact was heterogeneous: micro and small firms, as well as sectors intensive in face-to-face interaction, experienced larger declines, while firms engaged in international trade and those with access to bank credit displayed greater resilience. The findings indicate that the pandemic amplified pre-existing productivity gaps within Peru’s formal sector in the short run, with potential implications for medium-term growth dynamics.