Early-Stage Business Formation: An Analysis of Applications for Employer Identification Numbers

75 Pages Posted: 8 Mar 2018

See all articles by Kimberly Bayard

Kimberly Bayard

Board of Governors of the Federal Reserve System

Emin Dinlersoz

Center for Economic Studies - US Census Bureau

Timothy Dunne

Federal Reserve Bank of Cleveland

John Haltiwanger

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

Javier Miranda

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

John J. Stevens

Federal Reserve Board - Division of Research and Statistics

Multiple version iconThere are 2 versions of this paper

Date Written: 2018-03-05

Abstract

This paper reports on the development and analysis of a newly constructed dataset on the early stages of business formation. The data are based on applications for Employer Identification Numbers (EINs) submitted in the United States, known as IRS Form SS-4 filings. The goal of the research is to develop high-frequency indicators of business formation at the national, state, and local levels. The analysis indicates that EIN applications provide forward-looking and very timely information on business formation. The signal of business formation provided by counts of applications is improved by using the characteristics of the applications to model the likelihood that applicants become employer businesses. The results also suggest that EIN applications are related to economic activity at the local level. For example, application activity is higher in counties that experienced higher employment growth since the end of the Great Recession, and application counts grew more rapidly in counties engaged in shale oil and gas extraction. Finally, the paper provides a description of new public use dataset, the “Business Formation Statistics (BFS),” that contains new data series on business applications and formation. The initial release of the BFS shows that the number of business applications in the 3rd quarter of 2017 that have relatively high likelihood of becoming job creators is still far below pre-Great Recession levels.

Keywords: Business fluctuations and cycles, Urban rural and regional economics

JEL Classification: L26, R11

Suggested Citation

Bayard, Kimberly and Dinlersoz, Emin and Dunne, Timothy and Haltiwanger, John C. and Miranda, Javier and Stevens, John J., Early-Stage Business Formation: An Analysis of Applications for Employer Identification Numbers (2018-03-05). FEDS Working Paper No. 2018-015. Available at SSRN: https://ssrn.com/abstract=3136357 or http://dx.doi.org/10.17016/FEDS.2018.015

Kimberly Bayard (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Emin Dinlersoz

Center for Economic Studies - US Census Bureau ( email )

4600 Silver Hill Road
Washington, DC 20233
United States

Timothy Dunne

Federal Reserve Bank of Cleveland ( email )

PO Box 6387
Cleveland, OH 44101-1387
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

Javier Miranda

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

4700 Silver Hill Road
Washington, DC 20233
United States

John J. Stevens

Federal Reserve Board - Division of Research and Statistics ( email )

20th and C Streets, NW
Washington, DC 20551
United States

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