Working Remotely and the Supply-Side Impact of COVID-19

We analyze the supply-side disruptions associated with Covid. We find that sectors in which a higher fraction of the workforce is not able to work remotely experienced greater declines in employment and expected revenue growth, worse stock market performance, and higher likelihood of default. The stock market overweighs low-exposure industries, thus our findings cast light on the disconnect between stock market indices and aggregate outcomes. We combine these ex-ante heterogeneous industry exposures with daily financial market data to create a stock return portfolio that tracks news about the supply-side disruptions resulting from the pandemic.