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State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data
January 2017
Working Paper Number:
CES-17-02
Using Census microdata on multi-state firms, we estimate the impact of state taxes on business activity. For C corporations, employment and the number of establishments have corporate tax elasticities of -0.4, and do not vary with changes in personal tax rates. Pass-through entity activities show tax elasticities of -0.2 to -0.3 with respect to personal tax rates, and are invariant with respect to corporate tax rates. Reallocation of productive resources to other states drives around half the effect. Capital shows similar patterns but is 36% less elastic than labor. The responses are strongest for firms in tradable and footloose industries.
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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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Creditor Rights and Entrepreneurship:
Evidence from Fraudulent Transfer Law*
January 2016
Working Paper Number:
CES-16-31
We examine entrepreneurial activity following the adoption of fraudulent transfer laws in the U.S. These laws strengthen creditor rights by removing the burden of proof from creditors attempting to claw back funds that were transferred out of failing businesses. These laws are particularly important for entrepreneurs whose personal assets are often commingled with those of the venture. Using establishment-level data from the U.S. Census Bureau, we find significant declines in start-up entry, churning among new entrants, and closures of existing ventures after the passage of these laws. Our
findings suggest that strengthening creditor rights can, in some circumstances, impede entrepreneurial activity and slow down the process of creative destruction.
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The Annual Survey of Entrepreneurs: An Introduction
November 2015
Working Paper Number:
CES-15-40R
The Census Bureau continually seeks to improve its measures of the U.S. economy as part of its mission. In some cases this means expanding or updating the content of its existing surveys, expanding the use of administrative data, and/or exploring the use of privately collected data. When these options cannot provide the needed data, the Census Bureau may consider fielding a new survey to fill the gap. This paper describes one such new survey, the Annual Survey of Entrepreneurs (ASE). Innovations in content, format, and process are designed to provide high-quality, timely, frequent information on the activities of one of the important drivers of economic growth: entrepreneurship. The ASE is collected through a partnership of the Census Bureau with the Kauffman Foundation and the Minority Business Development Agency. The first wave of the ASE collection started in fall of 2015 (for reference period 2014) and results will be released in summer 2016. Qualified researchers on approved projects will be able to access micro data from the ASE through the Federal Statistical Research Data Center (FSRDC) network.
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The Promise and Potential of Linked Employer-Employee Data for Entrepreneurship Research
September 2015
Working Paper Number:
CES-15-29
In this paper, we highlight the potential for linked employer-employee data to be used in entrepreneurship research, describing new data on business start-ups, their founders and early employees, and providing examples of how they can be used in entrepreneurship research. Linked employer-employee data provides a unique perspective on new business creation by combining information on the business, workforce, and individual. By combining data on both workers and firms, linked data can investigate many questions that owner-level or firm-level data cannot easily answer alone - such as composition of the workforce at start-ups and their role in explaining business dynamics, the flow of workers across new and established firms, and the employment paths of the business owners themselves.
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How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size
June 2013
Working Paper Number:
CES-13-30
There remains considerable debate in the theoretical and empirical literature about the differences in the cyclical dynamics of firms by firm size. This paper contributes to the debate in two ways. First, the key distinction between firm size and firm age is introduced. The evidence presented in this paper shows that young businesses (that are typically small) exhibit very different cyclical dynamics than small/older businesses. The second contribution is to present evidence and explore explanations for the finding that young/small businesses were hit especially hard in the Great Recession. The collapse in housing prices accounts for a significant part of the large decline of young/small businesses in the Great Recession.
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Long-Run Earnings Volatility and Health Insurance Coverage: Evidence from the SIPP Gold Standard File
October 2011
Working Paper Number:
CES-11-35
Despite the notable increase in earnings volatility and the attention paid to the growing ranks of the uninsured, the relationship between career earnings and short- and mediumrun health insurance status has been ignored due to a lack of data. I use a new dataset, the SIPP Gold Standard File, that merges health insurance status and demographics from the Survey of Income and Program Participation with career earnings records from the Social Security Administration (SSA) and the Internal Revenue Service (IRS) to examine the relationship between long-run family earnings volatility and health insurance coverage. I find that more volatile career earnings are associated with an increased probability of experiencing an uninsured episode, with larger effects for men, young workers, and the unmarried. These findings are consistent with the 'scarring' literature, and suggest the importance of safety-net measures for job losses and health insurance coverage.
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The Center for Economic Studies 1982-2007: A Brief History
October 2009
Working Paper Number:
CES-09-35
More than half a century ago, visionaries representing both the Census Bureau and the external research community laid the foundation for the Center for Economic Studies (CES) and the Research Data Center (RDC) system. They saw a clear need for a system meeting the inextricably related requirements of providing more and better information from existing Census Bureau data collections while preserving respondent confidentiality and privacy. CES opened in 1982 to house new longitudinal business databases, develop them further, and make them available to qualified researchers. CES and the RDC system evolved to meet the designers' requirements. Research at CES and the RDCs meets the commitments of the Census Bureau (and, recently, of other agencies) to preserving confidentiality while contributing paradigm-shifting fundamental research in a range of disciplines and up-to-the-minute critical tools for decision-makers.
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Gender Differences in Business Performance: Evidence from the Characteristics of Business Owners Survey
December 2008
Working Paper Number:
CES-08-39
Using confidential microdata from the U.S. Census Bureau, we investigate the performance of female-owned businesses making comparisons to male-owned businesses. Using regression estimates and a decomposition technique, we explore the role that human capital, especially through prior work experience, and financial capital play in contributing to why female-owned businesses have lower survival rates, profits, employment and sales. We find that female-owned businesses are less successful than male-owned businesses because they have less startup capital, and business human capital acquired through prior work experience in a similar business and prior work experience in family business. We also find some evidence that femaleowned businesses work fewer hours and may have different preferences for the goals of their business.
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Analysis of Young Neighborhood Firms Serving Urban Minority Clients
May 2008
Working Paper Number:
CES-08-11
This study empirically investigates Michael Porter's hypothesis that urban minority neighborhoods offer attractive opportunities to household-oriented businesses, such as retail firms (1995). Our analysis compares the traits and performance of firms serving predominantly minority clients to those selling their products largely to clients who are nonminority whites. Controlling statistically for applicable firm and owner characteristics, our findings indicate that the minority neighborhood niche does not offer young firms an attractive set of opportunities. Relative to opportunities in the corresponding nonminority household niche and the broader regional marketplace, the neighborhood minority household market is associated with reduced business viability.
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