In the next section, we first report the results of the sales equation, followed by the results of the job loss equation. We then present “first stage” equation results, which are important to understanding the more primary determinants of sales.

# **4. Econometric Findings and Main Job Loss Risk Factors**

4.1 Determinants of Changes in Sales We find that there were some key determinants of changes in sales common to both countries that had a similar magnitude of impact on each. As shown in Table 4-1, those are ( _i_ ) weeks of closures due to COVID; ( _ii_ ) whether the supply of inputs decreased; ( _iii_ ) and export shocks. The impact of weeks of closure was similar across the two country cases at approximately 2-4 percent of sales lost per week of closure (similar to or greater than the 2 percent of a year that a week represents). In addition, a disruption or reduction in the supply of firms’ inputs drove a dip in sales of approximately 18 percent of sales (in the last completed month relative to the same month in the previous year) in both countries.

Some other influences on the firms’ sales shocks differed, as one might expect, between the two countries. In particular, in Georgia, infection risk significantly impacted sales, but we found no evidence that it did in Jordan. As shown in Figure 3, case counts remained low in both countries through the summer. However, behavioral responses may have varied due to the different levels of risk to the populations’ health, given Georgia’s older age structure.<sup>21</sup> The impact of export market shocks also differed: In Jordan, firms with a higher initial export share of sales did not necessarily fare better, especially if supplies were disrupted. However, Georgian firms that were exporting as of 2018 and that experienced less unfavorable global demand shocks were able to maintain higher sales, as shown above by the positive and statistically significant coefficient on the interaction term between being an exporter in 2018 and proxies for sector-specific global demand shocks.<sup>22</sup> 21 Percentages of the population by age ranges are shown below, according to the CIA Factbook:

||Percentage of Population by Age Range<br>|
|---|---|
|Age Range|Georgia<br>Jordan|
|0-14|18.4<br>33.1|
|15-24|10.9<br>19.8|
|25-54|40.6<br>38.4|
|55-64|13.2<br>5.1|
|65+|16.9<br>3.7|

22 For most sectors, the global demand shock variable is constructed using the year-on-year variation of aggregated US and EU imports of the corresponding category of goods from June 2019 to June 2020. To also capture the global shock in service sectors, particularly tourism, which is important for both Georgia and Jordan, the year-on-year variation in international flight arrivals from the first half of 2019 to the first half of 2020 was used to construct the variable. For nontourism service sectors, the shock is constructed by combining the shocks in the transportation sector and in upstream goods sectors (the weights of transportation are generally assumed to be 0.2 for wholesale sectors, 0.1 for retail sectors, and 0.5 for transportation related sectors, with the remainder 0.8, 0.9, and 0.5 for the related goods sectors).

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