. "4 Limitations of the Current Data System for Measuring Business Dynamics." Understanding Business Dynamics: An Integrated Data System for America's Future. Washington, DC: The National Academies Press, 2007.
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Understanding Business Dynamics: An Integrated Data System for America’s Future
4.1.2 Register-Based Business Dynamics Programs
Longitudinal microdata are essential for measuring business dynamics—births and deaths, expansions and contractions, mergers and splits, relocations, ownership changes, and worker flows—the processes on which this report is focused. Because sources of longitudinal business microdata have historically been scarce, particularly for smaller and newer businesses, research progress on business dynamics and entrepreneurship has been hampered. Recently, however, data products have begun to emerge that promise to greatly enhance available information relevant to these topics. In theory, tracking businesses through time can be accommodated either by designing longitudinal surveys or by linking records from successive years. For the most part, the latter strategy—linking data, mainly across administrative and survey sources—has been used at the statistical agencies because of cost and respondent burden constraints. Because of their proximity to the business lists, the Census Bureau and BLS are the key players in this new area. Among the most promising data sets now coming on line are BLS’s BED, and three Census Bureau efforts—the SUSB, produced jointly with the Small Business Administration (SBA); the LBD and its successor the Integrated Longitudinal Business Database (ILBD); and the Longitudinal Employer-Household Dynamics (LEHD) Program.
In addition to the establishment employment counts, the BED publishes quarterly statistics on job creation, broken out by expanding and opening establishments, and job destruction, broken out by contracting and closing establishments. Data are disaggregated by industry (sector level) and by firm size. The firm size data use tax EINs to aggregate across UI accounts. Development of the BED required BLS to overcome several methodological hurdles to create record linkages from EINs (in coordination with other information), which are imperfect for the purpose of producing firm-level statistics (see Okolie, 2004).8 The SUSB program at the Census Bureau (partially supported by the SBA) uses the Census Bureau register to construct annual measures of job creation and job destruction disaggregated by opening, expanding, contracting, and closing establishments, along with respective establishment counts. The SUSB reports currently provide more geographic and industry detail than does the BED, breaking data down data by state, enterprise size, metropolitan statistical area, and 4-digit NAICS code (plans are in the works at BLS to produce statistics at finer levels of detail in these dimensions). However, the SUSB annual reports are issued with a significant lag (2 to 3 years) compared with the BED reports
Spletzer et al. (2004) provide an overview of the BED program.