. "5 Improving Data and Statistics on Business Dynamics - Bridging the Gap Between the Current and a Comprehensive System." 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
industries by age. The appropriate milestone for defining a business birth will vary by purpose.
A focus on publishing statistics by business age would also dovetail well with the recent innovations in measuring producer dynamics in the microdata-based BED and SUSB/LBD programs. Since these programs rely on the accurate measurement of entry and exit of producers and the accurate tracking of existing producers over time, their statistical frames could be readily adapted to include statistics disaggregated by business age.
The development of longitudinal versions of the business registers at both the Census Bureau and BLS would permit using business age as a stratifying variable to annual, monthly, and quarterly surveys. Because many key statistics (e.g., productivity by industry) integrate survey information from multiple sources, adding downstream data products delineated by business age would require increased coordination by the agencies to make definitions consistent. Initially, business age should be added to surveys for which the new information would be most valuable. Good candidates for this might be the Annual Capital Expenditures Survey and the National Science Foundation’s Research and Development Survey. The Census Bureau’s Survey of Business Owners (SBO) offers something of a model, given that it already asks respondents for information on business age.
5.1.2 Nascent Business Activity—The Essential Role of Household-Based Data
Tracing the entire life cycle of businesses and measuring and analyzing the processes through which they are born and grow require going beyond traditional data collection from employer businesses. Nascent businesses encompass the entrepreneurial activities of individuals or households before they come in contact with the legal system as business entities—thus, business registers take one only so far in measuring business dynamics. Only after acquiring an EIN as a federal business taxpayer, or as a state Unemployment Insurance taxpayer, is a business tracked in the frames used by BLS and the Census Bureau to measure economic activity. Unlike the BLS register, the Census Bureau register does includes nonemployer businesses if they have taxable revenues. However, businesses are not typically included in the major surveys of these agencies until they become employer businesses with positive payrolls or taxable revenues.
There is little in the current system that provides a way of tracking individuals as they enter into the business creation process and spend time and resources in an effort to organize and implement a new firm. The most direct way to capture many of the activities (and characteristics of those