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LODES Design and Methodology Report: Methodology Version 7
August 2025
Working Paper Number:
CES-25-52
The purpose of this report is to document the important features of Version 7 of the LEHD Origin-Destination Employment Statistics (LODES) processing system. This includes data sources, data processing methodology, confidentiality protection methodology, some quality measures, and a high-level description of the published data. The intended audience for this document includes LODES data users, Local Employment Dynamics (LED) Partnership members, U.S. Census Bureau management, program quality auditors, and current and future research and development staff members.
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The Impact of Childcare Costs on Mothers' Labor Force Participation
April 2025
Working Paper Number:
CES-25-25
The rising costs of childcare pose challenges for families, leading to difficult choices including those impacting mothers' labor force participation. This paper investigates the relationship between childcare costs and maternal employment. Using data from the National Database of Childcare Prices, the American Community Survey, and the Longitudinal Employer Household Dynamics, we estimate the impact of childcare costs on mothers' labor force participation through two empirical strategies. A fixed-effects approach controls for geographic and temporal heterogeneity in costs as well as mothers' idiosyncratic preferences for work and childcare, while an instrumental variables approach addresses the endogeneity of mothers' preferences for work and childcare by leveraging exogenous geographic and temporal variation in childcare licensing requirements. Our findings across both research designs indicate that higher childcare costs reduce labor force participation among mothers, with lower-income mothers exhibiting greater responsiveness to changes in childcare costs.
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The Intangible Divide: Why Do So Few Firms Invest in Innovation?
February 2025
Working Paper Number:
CES-25-15
Investments in software, R&D, and advertising have surged, nearing half of U.S. private nonresidential investment. Yet just a few hundred firms dominate this growth. Most firms, including large ones, regularly invest little in capitalized software and R&D, widening this 'intangible divide' despite falling intangible prices. Using comprehensive US Census microdata, we document these patterns and explore factors associated with intangible investment. We find that firms invest significantly less in innovation-related intangibles when their rivals invest more. One firm's investment can obsolesce rivals' investments, reducing returns. This negative pecuniary externality worsens the intangible divide, potentially leading to significant misallocation.
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Business Dynamics Statistics of Coastal Counties: A Description of Differences in Coastal Areas Over Time
January 2025
Working Paper Number:
CES-25-08R
The Business Dynamics Statistics of Coastal Counties (BDS-CC) is a new experimental data product extending the set of statistics published by the Business Dynamics Statistics (BDS) program to provide more detail on businesses operating in coastal regions of the United States. The BDS-CC provides annual measures of employment, the number of establishments and firms, job creation, job destruction, openings, and closings for businesses in Coastal Shoreline (CS), Coastal Non-Shoreline (CNS), and Non-Coastal (NC) counties. Counties are grouped into these categories based on definitions from the National Oceanic and Atmospheric Administration (NOAA). This product allows for comparisons across industries and coastal regions of the impact of natural disasters and other events that affect coastal areas. The BDS-CC series provides annual statistics for 1978 to 2022 for each of the coastal categories by firm size and firm age, initial firm size, establishment size and establishment age, initial establishment size, sector, 3-digit NAICS code, 4-digit NAICS code, urban/rural categories, and various coastal regions. Following a description of the data and methodology, we highlight some historical trends and analyses conducted using these data.
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Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization
December 2024
Working Paper Number:
CES-24-78
We analyze the distinct adjustment paths of U.S. labor markets (places) and U.S. workers (people) to increased Chinese import competition during the 2000s. Using comprehensive register data for 2000'2019, we document that employment levels more than fully rebound in trade-exposed places after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies. The adjustment of places to trade shocks is generational: affected areas recover primarily by adding workers to non-manufacturing who were below working age when the shock occurred. Entrants are disproportionately native-born Hispanics, foreign-born immigrants, women, and the college-educated, who find employment in relatively low-wage service sectors like medical services, education, retail, and hospitality. Using the panel structure of the employer-employee data, we decompose changes in the employment composition of places into trade-induced shifts in the gross flows of people across sectors, locations, and non-employment status. Contrary to standard models, trade shocks reduce geographic mobility, with both in- and out-migration remaining depressed through 2019. The employment recovery instead stems almost entirely from young adults and foreign-born immigrants taking their first U.S. jobs in affected areas, with minimal contributions from cross-sector transitions of former manufacturing workers. Although worker inflows into non-manufacturing more than fully offset manufacturing employment losses in trade-exposed locations after 2010, incumbent workers neither fully recover earnings losses nor predominately exit the labor market, but rather age in place as communities undergo rapid demographic and industrial transitions.
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The China Shock Revisited: Job Reallocation and Industry Switching in U.S. Labor Markets
October 2024
Working Paper Number:
CES-24-65
Using confidential administrative data from the U.S. Census Bureau we revisit how the rise in Chinese import penetration has reshaped U.S. local labor markets. Local labor markets more exposed to the China shock experienced larger reallocation from manufacturing to services jobs. Most of this reallocation occurred within firms that simultaneously contracted manufacturing operations while expanding employment in services. Notably, about 40% of the manufacturing job loss effect is due to continuing establishments switching their primary activity from manufacturing to trade-related services such as research, management, and wholesale. The effects of Chinese import penetration vary by local labor market characteristics. In areas with high human capital, including much of the West Coast and large cities, job reallocation from manufacturing to services has been substantial. In areas with low human capital and a high initial manufacturing share, including much of the Midwest and the South, we find limited job reallocation. We estimate this differential response to the China shock accounts for half of the 1997-2007 job growth gap between these regions.
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Entry Costs Rise with Growth
October 2024
Working Paper Number:
CES-24-63
Over time and across states in the U.S., the number of firms is more closely tied to overall employment than to output per worker. In many models of firm dynamics, trade, and growth with a free entry condition, these facts imply that the costs of creating a new firm increase sharply with productivity growth. This increase in entry costs can stem from the rising cost of labor used in entry and weak or negative knowledge spillovers from prior entry. Our findings suggest that productivity-enhancing policies will not induce firm entry, thereby limiting the total impact of such policies on welfare.
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Transitional Costs and the Decline of Coal: Worker-Level Evidence
September 2024
Working Paper Number:
CES-24-53
We examine the labor market impacts of the U.S. coal industry's decline using comprehensive administrative data on workers from 2005-2021. Coal workers most exposed to the industry's contraction experienced substantial earnings losses, equivalent to 1.6 years of predecline wages. These losses stem from both reduced employment duration (0.37 fewer years employed) and lower annual earnings (17 percent decline) between 2012-2019, relative to similar workers less exposed to coal's decline. Earnings reductions primarly occur when workers remain in local labor markets but are not employed in mining. While coal workers do not exhibit lower geographic mobility, relocation does not significantly mitigate their earnings losses.
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Payroll Tax Incidence: Evidence from Unemployment Insurance
June 2024
Working Paper Number:
CES-24-35
Economic models assume that payroll tax burdens fall fully on workers, but where does tax incidence fall when taxes are firm-specific and time-varying? Unemployment insurance in the United States has the key feature of varying both across employers and over time, creating the potential for labor demand responses if tax costs cannot be fully passed through to worker wages. Using state policy changes and administrative data of matched employer-employee job spells, I study how employment and earnings respond to unexpected payroll tax increases for highly exposed employers. I find significant drops in employment growth driven by lower hiring, and minimal evidence of passthrough to earnings. The negative employment effects are strongest for young workers and single-establishment firms.
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How Big is Small? The Economic Effects of Access to Small Business Subsidies
June 2024
Working Paper Number:
CES-24-28
Industry size standards that determine eligibility for small business subsidies have vastly increased
over the past decade. We exploit quasi-random variation in the implementation of size standard
increases to study the effects on small firms, subsidy allocation, and industry outcomes using
Census Bureau microdata. Following size standard increases, revenues decline for an industry's
smallest firms, and they are less likely to survive. We link these effects to a reallocation of
government procurement contracts from smaller to larger firms. Consequently, industries become
more concentrated and growth declines. These findings highlight the broad economic effects of
changing eligibility for small business subsidies.
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