Business Dynamics in the National Establishment Time Series (NETS)

53 Pages Posted: 17 Jul 2019

See all articles by Leland Dod Crane

Leland Dod Crane

Board of Governors of the Federal Reserve System

Ryan Decker

Board of Governors of the Federal Reserve System

Date Written: 2019-05-13

Abstract

Business microdata have proven useful in a number of fields, but the main sources of comprehensive microdata are subject to significant confidentiality restrictions. A growing number of papers instead use a private data source seeking to cover the universe of U.S. business establishments, the National Establishment Time Series (NETS). Previous research documents the representativeness of NETS in terms of the distribution of employment and establishment counts across industry, geography, and establishment size. But there exists considerable need among researchers for microdata suitable for studying business dynamics --- birth, growth, decline, and death. We evaluate NETS in terms of its ability to corroborate key insights from the business dynamics literature with a particular focus on the behavior of new and young firms. We find that NETS microdata exhibit patterns of business dynamics that are markedly different from official administrative sources, limiting the usefulness of NETS for studying these topics.

Keywords: Business Microdata, Economic Measurement, Entrepreneurship, Firm Dynamics, High-Growth Firms, Job Flows

JEL Classification: C81, M13, D22, L26

Suggested Citation

Crane, Leland Dod and Decker, Ryan, Business Dynamics in the National Establishment Time Series (NETS) (2019-05-13). FEDS Working Paper No. 2019-034. Available at SSRN: https://ssrn.com/abstract=3417738 or http://dx.doi.org/10.17016/FEDS.2019.034

Leland Dod Crane (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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

Ryan Decker

Board of Governors of the Federal Reserve System ( email )

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

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