Business Dynamics Statistics Briefing: High Growth and Failure of Young Firms

Abstract

Newly released data from the U.S. Census Bureau, the Business Dynamics Statistics (BDS), allow unprecedented tracking of business dynamics for U.S. firms and establishments. This is the fourth in a series of briefings to highlight some key features of the data. What is the role of young entrepreneurial firms in job creation? Until now, researchers lacked comprehensive data broken out by firm age necessary for understanding this fundamental dynamic in our economy. A novel feature of the BDS is that employment growth and market selection can be tracked by firm age for the universe of U.S. private, non-agricultural businesses. The Business Dynamics Statistics (BDS) is a product of the U.S. Census Bureau that measures business openings and closings, startups, job creation and job destruction by firm size, age, industrial sector, and state. The U.S. economy is comprised of more than 6 million establishments with paid employees. The population of these businesses is constantly churning-some businesses grow, others decline, and yet others close. New businesses constantly replenish this pool. The BDS monitors this activity to provide a picture of the dynamics underlying aggregate net employment growth.