disruptions. In the next subsection, we present our findings on the determinants of key hypothesized drivers of sales and jobs.

4.3 Determinants of Other Hypothesized Influence Variables

# **4.3.1 Financial Difficulties**

Although we did not find evidence of a separate impact of financial difficulties, logically, one would expect that firms would be less able to adapt and ride out a crisis and less able to retain their permanent staff if they have a severe issue with liquidity. Based on our first stage estimation of the (assumed) exogenous determinants of experiencing financial difficulties, in both Jordan and Georgia firms were more likely to experience a financing constraint if they had relied on banks for working capital needs prior to the pandemic, reflecting differential reliance among business models on external sources of liquidity; and if they had more foreign ownership. However, at least as of June-July 2020, firms with different banking relationships and foreign ownership levels did not necessarily experience different levels of employee retention. The lack of significance may be due to the binary distribution of the variable and the lack of variation in it, as over 90 percent of firms claimed to experience these issues. Yet the experience of supply disruptions has a similar distribution and was found to be significant (See Appendix Table 15 and Appendix Table 16 in the longer version of this paper).

# **4.3.2 Ability to Adapt: Digital Solutions and Remote Work**

In some economies, especially advanced ones, the availability of digital technologies is likely to have protected certain lines of business, firms, and workers during the pandemic, expanding or retaining communication with customers and making work from home possible. However, our analysis produced no evidence that in our two UMIC’s, firms with higher shares of workers at home ( ) were better able to mitigate firms’ sales shocks during COVID-19 or the resulting magnitude of job losses.<sup>30</sup> EEIIssh On the supply side of the labor market, the ability to work from home ( ), has been posited as an important determinant of jobs at risk, at least during mandatory firm closures (e.g., Hatayama et al., 2020). WWFFWW To test whether firms downsized less when their sector occupational structures were more conducive to working from home, we estimated the determinants of firms’ share of workers working from home, . In particular, we examined the role of physical demands, face-to-face interaction, and level of ICT use in a job, as EEIIssh well as the share of workers with internet at home according to the latest labor force data, averaging across occupations by sector.<sup>31</sup> Our results show that the ICT task index was statistically significantly related to firms’ for both countries. However, the physical demands and in-person face to face indices of sector occupations were not significantly related to in either one. Measured internet use at home was EEIIssh insignificant for both as well, possibly in part because data on internet use was not sufficiently current. The EEIIssh index (proposed by Hatayama et al., 2020) was statistically significantly related to as well, due to the component ICT use. The physical demands and face to face components of the index have (smaller, WWFFWW EEIIssh 30 In a small fraction of the specifications tried, the share of workers using ICT was negatively related to job loss, but this result was very sensitive to the inclusion of insignificant regressors.

31 Household internet usage was likely very high for PFPS workers by the time COVID hit. For the populations as a whole, 67 percent had internet access in Jordan in 2017 and 73 percent for Georgia in 2020.

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