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Author:Terry, Ellie 

Discussion Paper
The financing experiences of nonemployer firms: evidence from the 2014 joint small business credit survey
Businesses without employees?or nonemployer firms?make up the majority of small businesses in the United States, but little is known about their financial lives, including their business financing needs and experiences. In this paper, we discuss findings from data on nonemployer firms in the 2014 Joint Small Business Credit Survey, a new annual survey by the Federal Reserve Banks of Atlanta, Cleveland, New York, and Philadelphia. Our results indicate that nonemployers use financing less than employers do. They hold less debt and apply for financing at lower rates, even when controlling for revenue size. The lower demand for credit appears to be a combination of a preference to avoid debt and a perception that nonemployers will be denied if they apply. Nonemployer applicants have more difficulty being approved and are likelier to seek financing from online lenders than are employer firms. We believe that the higher denial rates that nonemployers experience are at least partially explained by the differing attributes of the group. Nonemployers are younger, likelier to cite their poor credit score as a reason for denial, and less likely to be turning a profit than are employer firms.
AUTHORS: Rosoff, Stephanie; Terry, Ellie
DATE: 2015-07-01

Discussion Paper
How Do Firms Respond to Hiring Difficulties? Evidence from the Federal Reserve Banks' Small Business Credit Survey
Using data from the Federal Reserve Banks' 2017 Small Business Credit Survey (SBCS), this paper investigates the various ways in which different types of firms with less than 500 employees experience and address hiring difficulties, including when they decide to increase compensation. {{p}} The authors find significant variation in hiring difficulties by type of firm, and a firm's response appears to depend on the nature of the problem. The most common response is to increase compensation, with firms that experience competition from other employers being the most likely to do so. Other common responses were to engage in nonproduction activities?like training and job restructuring?that may boost longer-run productivity. {{p}} The results provide insight for policymakers trying to understand the linkage between compensation, labor market tightness, and productivity. Further, the variation in hiring difficulties across firm industry, education requirement, and geographic location informs economic and workforce development practitioners and policymakers working to develop targeted interventions.
AUTHORS: De Zeeuw, Mels; Terry, Ellie
DATE: 2018-08-21

Working Paper
Did the 2017 Tax Reform Discriminate against Blue State Voters?
The Tax Cut and Jobs Act of 2017 (TCJA) made significant changes to corporate and personal federal income taxation, including limiting the SALT (state and local property, income and sales taxes) deductibility to $10,000. States with high SALT tend to vote Democratic. This paper estimates the differential effect of the TCJA on red- and blue-state taxpayers and investigates the importance of the SALT limitation to this differential. We calculate the effect of permanent implementation of the TCJA on households using The Fiscal Analyzer: a life-cycle, consumption-smoothing program incorporating all major federal and state fiscal policies. We find that the average percentage increase in remaining lifetime spending under the TCJA is 1.6 percent in red states versus 1.3 percent in blue states. Among the richest 10 percent of households, this differential is larger. Rich households in red states enjoyed a 2.0 percent increase compared to a 1.2 percent increase among the rich in blue-state households. This gap is driven almost entirely by the limitation on the SALT deduction. Excluding the SALT limitation from the TCJA results in a spending gain of 2.6 percent for rich red-state households compared to 2.7 percent for rich blue-state households.
AUTHORS: Altig, David E.; Auerbach, Alan J.; Higgins, Patrick C.; Koehler, Darryl; Kotlikoff, Laurence J.; Leiseca, Michael; Terry, Ellie; Ye, Victor
DATE: 2019-04-01

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