Understanding Business Dynamics An Integrated Data System for America's Future (2007) / Chapter Skim
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4 Limitations of the Current Data System for Measuring Business Dynamics
4 Limitations of the Current Data System for Measuring Business Dynamics
Pages 65-91
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From page 65... ...
, considerable gains could be realized through better integration of data -- both administrative and survey based -- some of which would require more extensive data sharing between the Bureau of Economic Analysis (BEA) , the Bureau of Labor Statistics (BLS)
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From page 66... ...
Since administrative data sources can be used to track business dynamics, and in particular young and small businesses, we then turn our attention to data gaps in the business registers. However, since administrative data must
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From page 67... ...
While progress has been made more recently at the statistical agencies to develop and improve statistics on business dynamics, there are still important topics that cannot be adequately explored due to data deficiencies.2 Figure 4-1 summarizes the distribution of business data coverage, mapping data sources in terms of the business and labor populations they cover 2See Appendix A for a review of business data sources relevant to business dynamics.
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From page 68... ...
National Longitudinal Survey of Business Database Youth [BLS, conducted by Ohio 13.
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From page 69... ...
There is little coverage of early and late life-cycle dynamics and a paucity of information on business creation and start-up phase processes that take place before businesses are incorporated into official registries. 4.1.1 Business Register Consistency and Coverage In assessing the current system for measuring business dynamics, it makes sense to begin at its core, with the business registries.
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From page 70... ...
, BLS, and the Census Bureau -- and one is a private database produced by Dun & Bradstreet. The business registers at the Census Bureau and BLS are the primary sources from which business statistics on firm and establishment dynamics are generated.
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From page 71... ...
An example here is work on the long-term effects of occupational hazards. The BLS business register, constructed primarily using data that originate from the Quarterly Census of Employment and Wages (QCEW)
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From page 72... ...
For example, in 2001, the CBP data show a total employment of about 115 million, while the QCEW figure was not quite 109 million -- a difference of about 5.5 percent.4 One difference in scope between these two business lists is that the Census business register includes nonemployer businesses while the QCEW does not (however, statistics on nonemployer businesses are published separately from the CBP)
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From page 73... ...
These differences in the processing of multiestablishment firms across the two registers result in comparability issues, especially with regard to time series movements in births and deaths, and to job creation and job destruction series. Comparisons made using the 2001 microdata indicate that there are about 309,000 cases in which the Census Bureau and BLS lists disagree in the single versus multiunit designation, and these businesses employ 21-22 million people.6 Even for the 4.1 million businesses that both agencies agree are single establishments, BLS estimates a total employment level of 35 million, and the Census Bureau a total of 38 million.
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From page 74... ...
A number of problems for downstream data users were discussed at a workshop on the topic of business data sharing.7 Presenters from BEA described the growing statistical discrepancy that now exists between GDP and gross domestic income (GDI) , two key aggregate measures of domestic output that should, in principle, agree.
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From page 75... ...
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.
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From page 76... ...
In contrast, the quality of both business registers suffers because they do not incorporate basic data on establishment output. The LBD, for instance, allows researchers to link the basic data on establishment and employment in the business register to richer data on inputs, outputs, characteristics of business owners, and other variables.
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From page 77... ...
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 allow for the measurement of business age and the production of statistics disaggregated by business age. This involves no new collection of data but would require business registers to maintain information that, though relatively easy to construct at the establishment level, does require somewhat greater effort at the firm level, where adjustments for mergers and acquisitions must be incorporated into the company age data.
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From page 78... ...
Fairlie enumerated a list of advantages of data collected from households relative to that collected from businesses. Household data sources currently offer comparatively large sample sizes and long time series; more timely estimates of business ownership and entrepreneurship; built-in comparison groups of nonbusiness owners; the potential, when in panel form, for measuring entrepreneurship, business creation, transitions into and out of self-employment,11 and for examining income growth (e.g., the National 11By linking the CPS files over time, longitudinal data can be created, which allows business creation to be examined.
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From page 79... ...
4.3 SYSTEMIC DEFICIENCIES 4.3.1 Insufficient Interagency Data Coordination In some cases, the data that would be most useful to researchers and policy makers for measuring business dynamics are simply not collected. In other cases, survey data are collected or administrative records maintained, but they cannot be shared among the statistical agencies.13 Insufficient data 12The SBO is similar to the Characteristics of Business Owners survey conducted in prior census years (e.g., 1987 and 1992 -- the survey was cancelled in 1997 due to budget limitations)
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From page 80... ...
However, enabling legislation for the sharing of tax data is not part of CIPSEA. As a result, data in the Census Bureau's business register, which is constructed in large part from IRS tax data, cannot be shared.14 This, in turn, impedes coordination of the business lists maintained by the statistical agencies.
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From page 81... ...
While the statistical agencies already share data -- effectively in some cases -- a more extensive data-sharing arrangement between BLS and Census would likely lead to improvements in both lists. BLS industry coding, physical location addresses, multiunit data from the MWR, and employment data for single units are recognized as being very thorough, and this level of detail would be -- and, to some extent, already is -- beneficial for use in Census programs.16 The Census Bureau is particularly interested in the data of multiunit companies within states, as well as in BLS data for the client businesses of professional employer organizations (PEOs)
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From page 82... ...
Improving measurement and understanding of business dynamics in general, and young and small businesses in particular, can be accomplished only through partnerships between the statistical agencies and the research community. This in turn requires access, with appropriate safeguards and for approved projects, to the underlying firm-level data.
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From page 83... ...
Researcher access is critical for addressing the data gaps highlighted in this chapter. Data sharing with accompanying data integration and coordination within the statistical agencies will go a long way toward improvements in business statistics.
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From page 84... ...
Smaller firms seem to indicate that financial information is more sensitive than do larger firms. Smaller firms are consequently more concerned than larger firms about providing information to the Census Bureau and other statistical agencies; multiunit companies consider company-level data more sensitive than establishment-level data.
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. In others cases, re searchers must travel to statistical agencies to gain access (Germany)
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Synthetic data and multiple imputation techniques have also been used in the LEHD program. This has allowed data to be released at the block level without compromising the confidentiality of individuals or businesses.
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statistical agencies have long been recognized. The National Research Council's 1993 report, Private Lives and Public Policies: Confidentiality and Accessibility of Government Statistics, included a section on "Barriers to Data Sharing within Government" in which the authoring panel wrote (p.
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From page 88... ...
issued a report identifying efforts by the Census Bureau to create a centralized business register for use by other statistical agencies. That report, After Six Years, Legal Obstacles Continue to Restrict Government Use of the Standard Statistical Establish List, supported changing Section 6103; its findings were summarized as follows (title page)
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From page 89... ...
More recent proposals concerning data sharing have called for enact ment of legislation that would allow statistical agencies to share data and information with appropriate safeguards to protect against breaches of confidentiality. These proposals were not adopted, in part because of general concerns that greater data sharing might endanger the privacy of individuals.
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From page 90... ...
In particular, targeted improvements to the source data for the national accounts would go a long way toward illuminating the causes of the growing statistical discrepancy. Another cost-effective measure would be to ease the current restrictions on the sharing of confidential statistical data among federal statistical agencies.
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From page 91... ...
should be expanded to additional specified statistical agencies, and such agencies should be permitted, upon prior Treasury approval, to share IRS data with each other." It also specified the agencies to include and that the change to Section 6103 should cover both individual and business records. Private business economists have actively supported data sharing.
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