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Reservation Nonemployer and Employer Establishments: Data from U.S. Census Longitudinal Business Databases
December 2018
Working Paper Number:
CES-18-50
The presence of businesses on American Indian reservations has been difficult to analyze due to limited data. Akee, Mykerezi, and Todd (AMT; 2017) geocoded confidential data from the U.S. Census Longitudinal Business Database to identify whether employer establishments were located on or off American Indian reservations and then compared federally recognized reservations and nearby county areas with respect to their per capita number of employers and jobs. We use their methods and the U.S. Census Integrated Longitudinal Business Database to develop parallel results for nonemployer establishments and for the combination of employer and nonemployer establishments. Similar to AMT's findings, we find that reservations and nearby county areas have a similar sectoral distribution of nonemployer and nonemployer-plus-employer establishments, but reservations have significantly fewer of them in nearly all sectors, especially when the area population is below 15,000. By contrast to AMT, the average size of reservation nonemployer establishments, as measured by revenue (instead of the jobs measure AMT used for employers), is smaller than the size of nonemployers in nearby county areas, and this is true in most industries as well. The most significant exception is in the retail sector. Geographic and demographic factors, such as population density and per capita income, statistically account for only a small portion of these differences. However, when we assume that nonemployer establishments create the equivalent of one job and use combined employer-plus-nonemployer jobs to measure establishment size, the employer job numbers dominate and we parallel AMT's finding that, due to large job counts in the Arts/Entertainment/Recreation and Public Administration sectors, reservations on average have slightly more jobs per resident than nearby county areas.
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An Economic Analysis of Privacy Protection and Statistical Accuracy as Social Choices
August 2018
Working Paper Number:
CES-18-35
Statistical agencies face a dual mandate to publish accurate statistics while protecting respondent privacy. Increasing privacy protection requires decreased accuracy. Recognizing this as a resource allocation problem, we propose an economic solution: operate where the marginal cost of increasing privacy equals the marginal benefit. Our model of production, from computer science, assumes data are published using an efficient differentially private algorithm. Optimal choice weighs the demand for accurate statistics against the demand for privacy. Examples from U.S. statistical programs show how our framework can guide decision-making. Further progress requires a better understanding of willingness-to-pay for privacy and statistical accuracy.
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The Great Recession and a Missing Generation of Exporters
August 2018
Working Paper Number:
CES-18-33
The collapse of international trade surrounding the Great Recession has garnered significant attention. This paper studies firm entry and exit in foreign markets and their role in the post-recession recovery of U.S. exports using confidential microdata from the U.S. Census Bureau. We find that incumbent exporters account for the vast majority of the decline in export volumes during the crisis. The recession also induced a missing generation of exporters, with large increases in exits and a substantial decline in entries into foreign markets. New exporters during these years tended to have larger export volumes, however, compensating for the decline in the number of exporting firms. Thus, while entry and exit were important for determining the variety of U.S. goods that were exported, they were less important for the trajectory of aggregate foreign sales.
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Missing Growth from Creative Destruction
April 2018
Working Paper Number:
CES-18-18
Statistical agencies typically impute inflation for disappearing products based on surviving products, which may result in overstated inflation and understated growth. Using U.S. Census data, we apply two ways of assessing the magnitude of 'missing growth' for private nonfarm businesses from 1983'2013. The first approach exploits information on the market share of surviving plants. The second approach applies indirect inference to firm-level data. We find: (i) missing growth from imputation is substantial ' at least 0.6 percentage points per year; and (ii) most of the missing growth is due to creative destruction (as opposed to new varieties).
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Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data
January 2018
Working Paper Number:
CES-18-04
Using supplier-level trade data, we estimate the effect on consumer welfare from changes in U.S. imports both in the aggregate and for different household income groups from 1998 to 2014. To do this, we use consumer preferences which feature non-homotheticity both within sectors and across sectors. After structurally estimating the parameters of the model, using the universe of U.S. goods imports, we construct import price indexes in which a variety is defined as a foreign establishment producing an HS10 product that is exported to the United States. We find that lower income households experienced the most import price inflation, while higher income households experienced the least import price inflation during our time period. Thus, we do not find evidence that the consumption channel has mitigated the distributional effects of trade that have occurred through the nominal income channel in the United States over the past two decades.
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The Cross-Section of Labor Leverage and Equity Returns*
January 2017
Working Paper Number:
CES-17-70
We study labor-induced operating leverage. Theoretically, we show that if labor markets are frictionless, two sufficient conditions for the existence of labor leverage are (a) relatively smooth wages and (b) a capital-labor elasticity of substitution strictly less than one. Our model provides theoretical support for the use of labor share'the ratio of labor expenses to value added'as a measure of labor leverage. We provide evidence for conditions (a) and (b), and we demonstrate the economic significance of labor leverage: High labor-share firms have operating profits that are more sensitive to economic shocks and have higher expected returns.
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Reservation Employer Establishments: Data from the U.S. Census Longitudinal Business Database
January 2017
Working Paper Number:
CES-17-57
The presence of employers and jobs on American Indian reservations has been difficult to analyze due to limited data. We are the first to geocode confidential data on employer establishments from the U.S. Census Longitudinal Business Database to identify location on or off American Indian reservations. We identify the per capita establishment count and jobs in reservation-based employer establishments for most federally recognized reservations. Comparisons to nearby non-reservation areas in the lower 48 states across 18 industries reveal that reservations have a similar sectoral distribution of employer establishments but have significantly fewer of them in nearly all sectors, especially when the area population is below 15,000 (as it is on the vast majority of reservations and for the majority of the reservation population). By contrast, the total number of jobs provided by reservation establishments is, on average, at par with or somewhat higher than in nearby county areas but is concentrated among casino-related and government employers. An implication is that average job numbers per establishment are higher in these sectors on reservations, including those with populations below 15,000, while the remaining industries are typically sparser within reservations (in firm count and jobs per capita). Geographic and demographic factors, such as population density and per capita income, statistically account for some but not all of these differences.
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Going Entrepreneurial? IPOs and New Firm Creation
January 2017
Working Paper Number:
CES-17-18
Using matched employee-employer US Census data, we examine the effect of a successful initial public offering (IPO) on employee departures to startups. Accounting for the endogeneity of a firm's choice to go public, we find strong evidence that going public induces employees to leave for start-ups. Moreover, we document that the increase in turnover following an IPO is driven by employees departing to start-ups; we find no change in the rate of employee departures for established firms. We present evidence that, following an IPO, many employees who received stock grants experience a positive shock to their wealth which allows them to better tolerate the risks associated with joining a startup or to obtain funding. Our results suggest that the recent declines in IPO activity and new firm creation in the US may be causally linked. The recent decline in IPOs means fewer workers may move to startups, decreasing overall new firm creation in the economy.
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Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown
January 2017
Working Paper Number:
CES-17-17
A large literature documents declining measures of business dynamism including high-growth young firm activity and job reallocation. A distinct literature describes a slowdown in the pace of aggregate labor productivity growth. We relate these patterns by studying changes in productivity growth from the late 1990s to the mid 2000s using firm-level data. We find that diminished allocative efficiency gains can account for the productivity slowdown in a manner that interacts with the within firm productivity growth distribution. The evidence suggests that the decline in dynamism is reason for concern and sheds light on debates about the causes of slowing productivity growth.
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Learning and the Value of Relationships in International Trade
February 2016
Working Paper Number:
CES-16-11
How valuable are long-term supplier relationships? To address this question, this paper explores relationships between U.S. importers and their suppliers abroad. We establish several facts: almost half of U.S. imports involve relationships three years or older, relationship survival and traded quantity increase as a relationship ages, and long-term relationships were more resilient in the 2008-09 financial crisis. We present a model of importer learning and calibrate it using our data. We estimate large differences in the value of relationships across countries. Counterfactuals show that relationships are central to trade dynamics.
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