Working Paper: NBER ID: w13226
Authors: Steven J. Davis; John Haltiwanger; Ron S. Jarmin; C. J. Krizan; Javier Miranda; Alfred Nucci; Kristin Sandusky
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.
Keywords: business dynamics; young businesses; small businesses; employer status; nonemployer businesses
JEL Codes: C81; D21; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| nonemployer businesses (M13) | employer businesses (L26) |
| nonemployer businesses (M13) | revenue growth (O49) |
| ownership linkages (L14) | transition from nonemployer to employer (L26) |
| transition from nonemployer to employer (L26) | business formation dynamics (L26) |