Cuts in U.S. Department of Defense budgets have led to changes in the personnel levels at military bases throughout the United States. Because these bases are often significant sources of civilian and military employment and also provide customers for local businesses, closing them distresses local citizens, business leaders and politicians. In, Defense Secretary William Cohen launched a new drive to close dozens more military bases. Given the timeliness and magnitude of these actions, and in light of the predictions of hardship surrounding them, it is important to realistically assess the impact of substantial personnel changes at military bases on employment at neighboring businesses. This study utilizes a new and uniquely well-suited confidential dataset to analyze this issue at the level closures' impact are thought to occur: individual establishments and their employees. Using an establishment-level panel dataset that covers all private establishments in California with positive employment from 1989 to 1996, I examine how the employment dynamics of establishments across the full spectrum of industries are affected by personnel changes at nearby military bases and find that despite establishments' growth rates declining, more establishments going out of business and fewer new ones starting, when bases close workers' employment prospects actually improve.
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GOVERNMENT TECHNICAL ASSISTANCE PROGRAMS* AND PLANT SURVIVAL: THE ROLE OF PLANT OWNERSHIP TYPE
February 1999
Working Paper Number:
CES-99-02
This paper compares the survival rates of plants participating in manufacturing extension programs to nonparticipating plants. Participating plants receive technical and business assistance from one of a nationwide network of extension centers intended to assist smaller manufacturers. Results suggest that plant survival is related to plant size, age, productivity, capital intensity and ownership type. Importantly, the impact of extension services differs across ownership types. Participating in extension increases the probability of survival for single unit plants, but not for multi units. This result is consistent with the notion that single unit plants have less access to information on new technologies and would, therefore, benefit more from technical assistance programs such as manufacturing extension.
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MEASURES OF JOB FLOW DYNAMICS IN THE U.S.*
January 1999
Working Paper Number:
CES-99-01
This paper uses the new Longitudinal Establishment and Enterprise Microdata (LEEM) at CES to investigate gross and net job flows for the U. S. economy. Much of the previous work on U.S. job flows has been based on analysis of the Longitudinal Research Database (LRD), which is limited to establishments in the manufacturing sector. The LEEM is the first high-quality, nationwide, comprehensive database for both manufacturing and non-manufacturing that is suitable for measuring annual job flows. We utilize the LEEM data to measure recent gross and net job flows for the entire U. S. economy. We then examine the relationships between firm size, establishment size, and establishment age, and investigate differences resulting from use of two alternative methods for classification of job flows by size of firm and establishment. Cell-based regression analysis is used to help distinguish among the effects of age, firm size, and establishment size on gross and net job flows in existing establishments. We find that gross job flow rates decline with age, and with increasing establishment size when controlling for age differences, whether initial size or mean size classification is utilized. Firm size differences contribute little or nothing additional when establishment size and age are controlled for. However, the relationship of net job growth to business size is very sensitive to the size classification method, even when data and all other methodology are identical. When mean size classification is used, the coefficient on establishment size for net job growth is generally positive, but when initial size is used, this coefficient is negative. These results shed light on some of the apparently conflicting findings in the literature on the relationship between net growth and the size of businesses.
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Spatial Organization of Firms: The Decision to Split Production and Administration
February 2004
Working Paper Number:
CES-04-03
A firm's production activities are often supported by non-production activities. Among these activities are administrative units including headquarters, which process information both within and between firms. Often firms physically separate such administrative units from their production activities and create stand alone Central Administrative Offices (CAO). However, having its activities in multiple locations potentially imposes significant internal firm face-to-face communication costs. What types of firms are more likely to separate out such functions? If firms do separate administration and production, where do they place CAOs and why? How often do firms open and close, or relocate CAOs? This paper documents such firms' decisions on their spatial organization by using micro-level data from the U.S. Census Bureau.
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Longitudinal Establishment And Enterprise Microdata (LEEM) Documentation
May 1998
Working Paper Number:
CES-98-09
This paper introduces and documents the new Longitudinal Enterprise and Establishment Microdata (LEEM) database, which has been constructed by Census' Economic Planning and Coordination Division under contract to the Office of Advocacy of the U.S. Small Business Administration. The LEEM links three years (1990, 1994, and 1995) of basic data for each private sector establishment with payroll in any of those years, along with data on the firm to which the establishment belongs each year. The LEEM data will facilitate both broader and more detailed analysis of patterns of job creation and destruction in the U.S., as well as research on the structure and dynamics of U.S. businesses. This paper provides documentation of the construction of LEEM data, summary data on most variables in the database, comparisons of the annual data with that of the nearly identical County Business Patterns, and distributions of establishments and their employment by the size of their firms. This is followed by a simple analysis of changes over time in the attributes of surviving establishments, and a brief discussion of turnover (business births and deaths) in the population and gross changes in employment associated with both establishment turnover and with surviving establishments. It concludes with a summary of the strengths and weaknesses of the LEEM.
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THE DYNAMICS OF LATINO-OWNED BUSINESS WITH COMPARISIONS TO OTHER ETHNICITIES
January 2016
Working Paper Number:
CES-16-33
This paper employs the Michigan Census Research Data Center to merge three limited-access Census Bureau data sets by individual firm and establishment level to investigate the factors associated with the Latino-owned Business (LOB) location and dynamics over time. The three main LOB outcomes under analysis are as follows: (1) the probability of a business being Latino-owned as opposed to a business being Asian-owned, Black-owned, or White-owned; (2) the probability of new business entry and exit; and (3) LOB employment growth. This paper then compares these factors associated with LOB with past findings on businesses that are Asian-owned, Black-owned, and White-owned. Some notable findings include: (1) only Black business owners are less associated with using personal savings as start-up capital than Latinos; (2) the only significant coefficient on start-up capital source is personal savings and it increases the odds of survival of a Latino business by 4%; (3) on average, having Puerto Rican ancestry decreases the odds of business survival; and (4) LOB are relatively likely to start a business with a small amount of capital, which, in turn, limits their future growth.
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Published Versus Sample Statistics From The ASM: Implications For The LRD
January 1991
Working Paper Number:
CES-91-01
In principle, the Longitudinal Research Database ( LRD ) which links the establishments in the Annual Survey of Manufactures (ASM) is ideal for examining the dynamics of firm and aggregate behavior. However, the published ASM aggregates are not simply the appropriately weighted sums of establishment data in the LRD . Instead, the published data equal the sum of LRD-based sample estimates and nonsample estimates. The latter reflect adjustments related to sampling error and the imputation of small-establishment data. Differences between the LRD and the ASM raise questions for users of both data sets. For ASM users, time-series variation in the difference indicates potential problems in consistently and reliably estimating the nonsample portion of the ASM. For LRD users, potential sample selection problems arise due to the systematic exclusion of data from small establishments. Microeconomic studies based on the LRD can yield misleading inferences to the extent that small establishments behave differently. Similarly, new economic aggregates constructed from the LRD can yield incorrect estimates of levels and growth rates. This paper documents cross-sectional and time-series differences between ASM and LRD estimates of levels and growth rates of total employment, and compares them with employment estimates provided by Bureau of Labor Statistics and County Business Patterns data. In addition, this paper explores potential adjustments to economic aggregates constructed from the LRD. In particular, the paper reports the results of adjusting LRD-based estimates of gross job creation and destruction to be consistent with net job changes implied by the published ASM figures.
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NEW DATA FOR DYNAMIC ANALYSIS: THE LONGITUDINAL ESTABLISHMENT AND ENTERPRISE MICRODATA (LEEM) FILE
December 1999
Working Paper Number:
CES-99-18
Until now, research on U.S. business activities over time has been hindered by the lack of accurate and comprehensive longitudinal data. The new Longitudinal Establishment and Enterprise Microdata (LEEM) are tremendously rich data that open up numerous possibilities for dynamic analyses of businesses in the U.S. economy. It is the first nationwide high-quality longitudinal database that covers the majority of employer businesses from all sectors of the economy. Due to the confidential nature of these data, the file is located at the Center for Economic Studies in the U.S. Bureau of the Census. To access the data, researchers must submit an acceptable proposal to CES and become sworn Census researchers. This paper describes the LEEM file, the variables contained on the file, and current uses of the data.
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Locally Owned Bank Commuting Zone Concentration and Employer Start-Ups in Metropolitan, Micropolitan and Non-Core Rural Commuting Zones from 1970-2010
August 2018
Working Paper Number:
CES-18-34
Access to financial capital is vital for the sustainability of the local business sector in metropolitan and nonmetropolitan communities. Recent research on the restructuring of the financial industry from local owned banks to interstate conglomerates has raised questions about the impact on rural economies. In this paper, we begin our exploration of the Market Concentration Hypothesis and the Local Bank Hypothesis. The former proposes that there is a negative relationship between the percent of banks that are locally owned in the local economy and the rate of business births and continuations, and a positive effect on business deaths, while that latter proposes that there is a positive relationship between the percent of banks that are locally owned in the local economy and the rate of business births and continuations, and a negative effect on business deaths. To examine these hypotheses, we examine the impact of bank ownership concentration (percent of banks that are locally owned in a commuting zone) on business establishment births and deaths in metropolitan, micropolitan and non-core rural commuting zones. We employ panel regression models for the 1980-2010 time frame, demonstrating robustness to several specifications and spatial spillover effects. We find that local bank concentration is positively related to business dynamism in rural commuting zones, providing support to the importance of relational lending in rural areas, while finding support for the importance of market concentration in urban areas. The implications of this research are important for rural sociology, regional economics, and finance.
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The Effects of Low-Valued Transactions on the Quality of U.S. International Export Estimates: 1994-1998
August 2004
Working Paper Number:
CES-04-11
This paper uses data from the U.S. Census Bureau Annual Survey of Manufactures (ASM) to examine the effects that a growth of low-valued transactions likely has on the quality of export estimates provided in the U.S. International Trade in Goods and Services (FT-990) series. These transactions, valued at less than $2,500, do not legally require the filing of export declarations. As a result, they are often not captured in the administrative records data used to construct FT-990 estimates. By comparing industry-level estimates created from the ASM to related FT-990 estimates, this paper estimates that the undercounting of low-valued transactions in the FT-990 export series increases by roughly $30 billion over the period of 1994-1997. It also finds that regression analysis provides little insight into the undercounting issue as results are primarily driven by industries whose contributions to total manufacturing exports are small.
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Job Flow Dynamics in the Service Sector
November 1999
Working Paper Number:
CES-99-14
This paper uses the new comprehensive Longitudinal Establishment and Enterprise Microdata at CES to investigate gross and net job flows for 1990 to 1995 for all establishments in the service sector. After examining the recent shifts in the distribution of employment in non-financial services, from single unit firms to multi-unit firms, and from smaller firms to larger ones, we calculate five year gross and net job flow rates for these various types of establishments. This shows that the increasing share of service employment in large firms is not due to higher growth in larger firms. Seeking the dynamics behind the shift of employment to larger firms, we investigate how job flow rates are related to firm and establishment size, using alternative size classification methods. Gross job flow rates vary inversely with the age of establishments in services, as do net growth rates of surviving establishments, even after controlling for size. To help distinguish among the effects of age, firm size, and establishment size on gross and net job flows in services, multivariate regression analysis is used. We find that all gross job flow rates decline with increasing age of establishments when size and industry differences are controlled. Because the job destruction rate falls faster than the creation rate as age increases, net growth rates increase with age for services as a whole. Gross and net job creation also declines with increasing size of establishments, but destruction rates increase with size when controlling for age and industry differences. Firm size differences contribute little or nothing additional when we control for establishment size and age.
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