Entrepreneurs and COVID-19 pandemic: Who are more likely to close their business in Latin America and the Caribbean?

Abstract

The COVID-19 pandemic led entrepreneurs to close numerous businesses due to reduced demand. This article aims to determine the specific characteristics of business owners in Latin America and the Caribbean, who faced closures due to low demand during the pandemic, including factors such as age, gender, income, and contextual variables such as economic sector and stringency measures. To do so, we employ a binary response model to estimate the likelihood of business closure due to low demand. Various model specifications, including both individual and contextual variables, are used to better analyze these effects. Our findings reveal a profile of entrepreneurs who were at a higher risk of closing their businesses due to reduced demand during the COVID-19 pandemic. Specifically, entrepreneurs without health insurance or emergency savings, operating within the wholesale and retail sector, were more susceptible to business closures.