Working Paper

Business Dynamics in the National Establishment Time Series (NETS)/Leland Crane, Ryan Decker


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 usefuln ess of NETS for studying these topics.

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

JEL Classification: M13; C81; L26; D22;

https://doi.org/10.17016/FEDS.2019.034

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2019-05-13

Number: 2019-034

Pages: 53 pages