Dear Faculty and Fellow Ph.D. Students,

I cordially invite you to attend my dissertation proposal presentation scheduled for Wednesday, May 8th, from 1:30 to 3:00 PM EST. The presentation will be held in Scheller College of Business, Room 203.

You are also welcome to join remotely via the provided Zoom link: https://gatech.zoom.us/j/9457318012

Area: Finance

Committee Members: Dr. Sudheer Chava (Chair), Dr. Narayanan Jayaraman, Dr. Manpreet Singh

Title: Adapting to Change: The Impact of Environmental, Economic, and Workplace Shifts on Small Businesses in the United States.

(Essays on Extreme Temperatures, Minimum Wage, Work-from-home and Small Businesses)

Dissertation Overview:

Small businesses are essential to the U.S. economic landscape, representing over 90% of all enterprises and contributing nearly half of the non-farm gross domestic product, as reported by the Bureau of Labor Statistics (BLS). This dissertation explores the impacts on small businesses in the face of varied challenges, including extreme temperature events, fluctuations in minimum wage, and the shift towards work-from-home models. These topics are crucial for understanding how small businesses navigate economic uncertainties and regulatory changes, thereby maintaining their pivotal role in economic growth.

Essay 1: Impact of Extreme Temperatures on Small Businesses – Evidence from 15 Million Establishments in the U.S.

Using unique proprietary data on monthly sales of 15 million small businesses, we find that extreme temperature events significantly affect sales, customer visits, and business exit rates. Our study highlights the vulnerability of small businesses to extreme heat and cold, with pronounced impacts in discretionary sectors, during weekends and during prolonged temperature events. Small, young, high sales-volatility establishments experience stronger negative impacts. Through panel regression with fixed effects, we isolate the causal effects of temperature shocks, demonstrating substantial reductions in sales and number of visits, and an increased likelihood of business closures. This research emphasizes the necessity for targeted strategies to bolster climate resilience among small businesses, offering valuable insights for policymakers and business leaders.

Essay 2: Assessing the Impact and Spillover Effects of Localized Minimum Wage Increases on Small Businesses

By studying a unique proprietary data detailing the monthly sales of 15 million small businesses with detailed location information, this study proposes an exploration of the differential impacts of county-level or city-level minimum wage (MW) increases as opposed to state-level adjustments, specifically focusing on small businesses. We aim to study how higher minimum wages affect financially constrained small enterprises and the subsequent economic outcomes to local and neighboring areas. The research hypothesizes that increases in minimum wage may compel small businesses to transfer increased operational costs to consumers, potentially reducing consumer demand especially for the ones that are closer to exit. This study will apply difference-in-differences model to examine a variety of potential effects including changes in local market dynamics such as business entries and exits, sales, consumer visits, market concentration, and commercial real estate values. Additionally, we will investigate spillover effects in neighboring counties or cities, potentially revealing contrasting patterns of business activity and market responses. Through a cross-sectional analysis, the study will focus on small-sized merchants, merchants with high local competition, sales volatility, labor intensity, and thin profit margins, positing that these entities might experience more pronounced impacts due to financial constraints. Conversely, the potential for increased consumer spending fueled by higher worker wages will also be examined. This research will contribute to the understanding of localized economic policies that influence small business and regional economic health, providing valuable insights for policymakers.

Essay 3: Navigating the New Normal: Impacts of Work-From-Home Trends on Small Businesses

This research proposal aims to explore the multifaceted impacts of work-from-home (WFH) arrangements on small businesses, with a focus on both short-term disruptions and long-term transformations. The shift toward increased remote work has profound implications for small businesses, particularly those dependent on office worker foot traffic, such as lunch spots in business districts, which may experience prolonged recovery times. Conversely, suburban areas might witness a surge in sales growth due to higher local demand. This study will assess the economic fallout, investigating potential permanent sales losses and differential impacts across various industries. Through this exploration, the study seeks to provide insights into the broader economic shifts induced by WFH trends, offering valuable information for small business strategy and policy formulation in an increasingly remote work environment.