Using worker flows to measure firm dynamics

Gary Benedetto, John Haltiwanger, Julia Lane, Kevin McKinney

Research output: Contribution to journalArticle

Abstract

Information on firm dynamics is critical to understanding economic activity, yet is fundamentally difficult to measure. In this article we introduce a new way of capturing dynamics: following clusters of workers as they move across administrative entities. We show that a worker flow approach improves linkages across firms in longitudinal business databases. The approach also provides conceptual insights into the changing structure of businesses and employer-employee relationships. Many worker-cluster flows involve changes in industry particularly movements into and out of personnel supply firms. Another finding, that a non-trivial fraction of firm entry is associated with such flows, suggests that a path for firm entry is a group of workers at an existing firm starting a new firm.

Original languageEnglish (US)
Pages (from-to)299-313
Number of pages15
JournalJournal of Business and Economic Statistics
Volume25
Issue number3
DOIs
StatePublished - Jul 2007

Keywords

  • Firm dynamics
  • Firm linkage
  • Matched employer/employee data
  • Personnel supply firms
  • Successor/predecessor firm

ASJC Scopus subject areas

  • Statistics and Probability
  • Social Sciences (miscellaneous)
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty

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