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Understanding Business Dynamics: An Integrated Data System for America’s Future
individual and firm characteristics. The resulting database contains about 80 million individual and 5 million business records from participating states. Using these data, it is possible to follow each employer-employee match on a quarterly basis.
The LEHD has created opportunities to conduct research on topics for which empirical analysis of confidential longitudinal linked employer-household microdata are required, such as research on low-wage workers and human capital and productivity. The LEHD is already facilitating the creation of new statistics describing the dynamic nature of local economies. For example, it has spawned the Local Employment Dynamics program, a voluntary partnership between state labor market information agencies and the Census Bureau to develop new information about local labor market conditions. By receiving and processing quarterly data from each of about 29 state partners, quarterly workforce indicators are being produced by industry, age, and sex for local areas. The Quarterly Workforce Indicators program generates timely statistics on job churning, such as rates of accession, separation, job creation, and job destruction by detailed industry and location. Among the interesting results: Accession and separation rates have been found to exceed 20 percent per quarter, while rates of job creation and destruction are typically 7-10 percent. These statistics, which are comparable to the job creation and destruction rates from the BED, translate into over 13 million jobs destroyed each year (http://www.bos.frb.org/economic/ppb/2004/ppb0401.htm).
The ILBD integration of longitudinal data (survey and administrative) for all employer and nonemployer businesses has created a tool for studying business start-ups and early life-cycle dynamics (Davis et al., 2006). By incorporating geographical information system applications, analysts have been able to describe how workers travel to and from work for transportation planning purposes. One finding from this work, which has focused on workers leaving businesses (these separations and accessions are highly visible but account for only about 1 percent of the total), is that clusters of workers affected by outsourcing often move to temporary help and personnel supply jobs, helping to explain the growth of that industry (see Benedetto et al., 2004). The LEHD illustrates the tip of the iceberg in terms of the information volume and detail that can be made available through data integration and the efficiency of the approach relative to developing new surveys.
Data in the LEHD are of course very sensitive and subject to strict Census confidentiality procedures. As documented in Abowd, Haltiwanger, and Lane (2004), “only authorized researchers working from Census-controlled facilities have worked with the LEHD microdata; however, major efforts to make the data available to external researchers are underway.” Since 2005, external researchers may access the LEHD data infra-