Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes

46 Pages Posted: 22 Aug 2012 Last revised: 27 Oct 2014

See all articles by Steven J. Davis

Steven J. Davis

University of Chicago; National Bureau of Economic Research (NBER)

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Ron S. Jarmin

U.S. Census Bureau

C. J. Krizan

Government of the United States of America - Bureau of the Census

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications

Alfred Nucci

U.S. Census Bureau - Center for Economic Studies

Lee Kristin Sandusky

U.S. Census Bureau

Date Written: July 2007

Abstract

We develop a preliminary version of an Integrated Longitudinal Business Database (ILBD) that combines administrative records and survey data for all employer and nonemployer business units in the United States. Unlike other large-scale business databases, the ILBD tracks business transitions from nonemployer to employer status. This feature of the ILBD opens a new frontier for the study of business formation, early lifecycle dynamics and the precursors to job creation in the U.S. economy. There are 5.4 million nonfarm business firms with employees as of 2000 and another 15.5 million with no employees. Our analysis focuses on 40 industries that account for nearly half of nonemployers and 36 percent of nonemployer revenues. Within these industries, nonemployers account for 14 percent of business revenues. About 220,000 of the seven million nonemployers in our selected industries hire workers and migrate to the employer universe over a three-year horizon. These Migrants account for 20 percent of revenue among young employers (three years or less since first hire). Compared to other nonemployers, the revenue of Migrants grows very rapidly in the year prior to and the year of transition to employer status.

Suggested Citation

Davis, Steven J. and Haltiwanger, John C. and Jarmin, Ron S. and Krizan, C. J. and Miranda, Javier and Nucci, Alfred and Sandusky, Lee Kristin, Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes (July 2007). NBER Working Paper No. w13226. Available at SSRN: https://ssrn.com/abstract=2133810

Steven J. Davis

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7312 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

John C. Haltiwanger

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3504 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Ron S. Jarmin

U.S. Census Bureau ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

C. J. Krizan

Government of the United States of America - Bureau of the Census ( email )

Suitland Federal Center
Washington, DC 20233
United States

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

Alfred Nucci

U.S. Census Bureau - Center for Economic Studies ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

Lee Kristin Sandusky

U.S. Census Bureau ( email )

4600 Silver Hill Road
Washington, DC 20233
United States

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