3.2. Successor-Predecessor File (SPF)

3.2.1. Overview

The firm identifier used in the LEHD infrastructure tables is a state-specific unemployment insurance (UI) account number used to administer the tax and benefits of the UI system. These account numbers, prepended by a state identifier and here called “SEIN,” can change for a number of reasons, including a simple change in legal form, a merger with another firm, or a divestiture into several firms. Typically, the separation of a worker from an employer is identified by a change in the SEIN on that workers’ UI wage records. If an employer changes SEINs but makes no other changes, the worker would appear to have left the original firm even though his or her employment status remains unchanged from an economic viewpoint. These spurious employer changes are known to induce biases in both employment and job flow statistics. For example, a simple change in account numbers would lead to the observation of a firm closing and all workers separating, even though all (or most) workers remain employed.

  • Successor-Predecessor File (SPF_ZZ)

    • Scope: State

    • Key: SEIN SEIN_SUCC QTIME

To identify and correct for such events, the Successor-Predecessor File (SPF) was created to track large worker movements between SEINs using quarterly UI wage records. Benedetto et al. [2007] used the SPF for an early analysis in one particular state of the impact of such an exercise. The SPF provides link characteristics based on the number of workers leaving an origin SEIN and entering a destination SEIN, presented in absolute terms and relative terms to the overall size of the firms. In addition to the UI-sourced information, predecessor and/or successor firms may be reported directly on the firm microdata from the Quarterly Census for Employment and Wages (QCEW or ES202), and these linkages are also recorded in the SPF. Note, links are identified using UI data for one state at a time. Cross-state firm relocations are not identified here, and such events would be interpreted as separations in the origin state and accessions in the destination state.

Research use of the SPF

The linkages identified in the SPF have already been incorporated into jobs on the JHF and QWI tables as described in Accounting for Successor-Predecessor Events. The JHF is the recommended input for analyses of job starts, tenure, separations, at the job level, and the QWI can be used for establishment-level calculations of job flows. The SPF itself may not be needed by most researchers.

Researchers who wish to explore an alternate method of accounting for SEIN changes (e.g., modifying the thresholds that identify firm linkages) may want to use the full set of flows presented in the SPF. Researchers interested in the evolution of firm structure across mergers and divestures may also benefit from linkages found in the SPF.

3.2.2. User Guidance

Identifying Transitions in UI Data

SPF processing starts by finding all job-level separations and accessions from the quarterly UI data. A separation in period t is defined for PIK i from firm j when i receives earnings from j in quarter t, but not in t+1. Similarly, an accession in period t is defined for PIK i into firm k when i receives earnings from k in quarter t but did not in t-1. Then for every PIK, separations in period t are linked with all accessions in periods t or t+1 to identify possible candidates for SEIN transitions at the job level. The timing in this linkage strategy recognizes that a transition could be reported to occur within a quarter or across quarters, or indeed a combination of both at the firm level.

These SEIN transitions found at the PIK level are then aggregated across PIKs to get the count of transitions from predecessor j (SEIN) to successor k (SEIN_SUCC) in period t (qtime), where t is the quarter of separation from i (accession to j in t or t+1). The count of PIKs making the transition is recorded in the NUM_LEFT variable. For informational purposes, the MATCH_PERIOD variable is created to report the share of jobs for which the accession occurred in t+1. The de minimis SEIN transitions are ignored by removing links where the NUM_LEFT is less than 6. The remaining records form the UI-sourced frame of the SPF.

Assessing Strength of SEIN Transitions in UI Data

Several factors are used to assess whether a linkage between two firms in a quarter constitutes a predecessor-successor relationship:

  • The share of employment at the predecessor that transits to the successor

  • The share of employment at the successor that transited from predecessor

  • Death of the predecessor firm, such that UI records are no longer reported after the transition

  • Birth of the successor firm, such that UI records were not reported prior to the transition

The shares of jobs are provided in the variables RATIO (predecessor) and SUCC_RATIO (successor). Because of timing issues employment patterns and transitions, the numerator (the count of jobs in the transition) is not always a strict subset of the employment count at the firm, so the ratios are considered estimates of the share of the firm employment that is part of the transition. The ratio is capped at 100%. A ratio of 80% is considered the threshold for representing a large share of the predecessor or successor.

Composite flags LINK_UI and SUCC_LINK_UI are then created to combine the strength of the link with information on firm birth and death. The values of the flags are as follows (description for SUCC_LINK_UI in parentheses):

LINK_UI (SUCC_LINK_UI) Flag Values

1

Firm death (birth), flow constitutes a large percentage of predecessor (successor) employment

2

Firm death (birth), flow does not constitute a large percentage of predecessor (successor) employment.

4

Not firm death (birth), flow constitutes a large percentage of predecessor (successor) employment

5

Not firm death (birth), flow does not constitute a large percentage of predecessor (successor) employment.

Identifying Successor-Predecessor Relationships

For LEHD data products, only the strongest links based on the UI wage record flows are used to filter out spurious employer identifier changes. A link between two SEINs is also used if it was directly reported on the input ES202 data, even if it does not meet the UI requirements. The following are the precise business rules used:

  • 80% of jobs at the predecessor are linked to accessions at the successor, and the predecessor firm dies after the transition.

    • LINK_UI=1

  • 80% of jobs at the successor are linked to separations from the predecessor, and the successor firm is born in the transition.

    • SUCC_LINK_UI=1

  • The separations in the flow represent 80% of employment at the successor, and the accessions in the flow represent 80% of employment at the successor.

    • LINK_UI=4 AND SUCC_LINK_UI=4

  • A flow of wage records is identified between firms in a quarter, and the predecessor and/or the successor SEIN is reported on the ES202.

    • SOURCE=”UIES”

Successor-predecessor relationships that meet at least one of these requirements are used to link job spells in the Job History File (JHF). The process of job linkage is further described in the documentation for the JHF.

3.2.3. Codebook

Table Metadata for Successor-Predecessor File (SPF_ZZ)

Access Requirements for SPF_ZZ
State Approval Required IRS Approval Required SSA Approval Required
Access Requirements X
Description

Flows of separations and hires between employers (SEINs) used to identify successor-predecessor relationships.

Scope

State

Key

SEIN SEIN_SUCC QTIME

Sort Order

SEIN SEIN_SUCC QTIME

File Format

SAS Data Table

Download Codebook

CSV

Variable Information

Variable Information for SPF_ZZ
Variable Name Type Length Description
SEIN char 12 SEIN - predecessor

QTIME

num 8

Quarter of separation, 1985Q1=1 (See details in appendix)

SEIN_SUCC char 12 SEIN - successor
MATCH_PERIOD num 8 Percent of transitions where separation precedes quarter of accession
NUM_LEFT num 8 Number of jobs transitioning between firms
ACTIVE_BEG_QTR_A num 3 First quarter predecessor is active on UI
ACTIVE_END_QTR_A num 3 Last quarter predecessor is active on UI
ACTIVE_BEG_QTR_B num 3 First quarter successor is active on UI
ACTIVE_END_QTR_B num 3 Last quarter successor is active on UI
num 3

Type of link for predecessor firm (See details below)

num 3

Type of link for successor firm (See details below)

BPEMP_MASTER num 8 Pred UI B Employment, max of last 3 quarters
RATIO num 8 Percent of jobs at predecessor transitioning to successor (estimated)
SUCC_RATIO num 8 Percent of jobs at successor transitioning from predecessor (estimated)

PRED_SIZE_CLASS_UI

num 8

Size class of predecessor based on UI data (B employment in qtime) (See details below)

SUCC_SIZE_CLASS_UI

num 8

Size class of successor based on UI data (M employment in qtime+1) (See details below)

EMP_ES num 8 Pred ES202 Month 1 Employment, max of last three quarters
ES_QTRS_OFF num 3 Number of quarters removed ES202 event date is from UI flow

SOURCE

char 4

Data source of link between firms (See details below)

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Description

Type of link for predecessor firm

Codebook

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Value Label
1 Firm death, flow constitutes a large percentage of predecessor employment
2 Firm death, flow does not constitute a large percentage of predecessor employment
4 Not firm death, flow constitutes a large percentage of predecessor employment
5 Not firm death, flow does not constitute a large percentage of predecessor employment

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Description

Type of link for successor firm

Codebook

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Value Label
1 Firm birth, flow constitutes a large percentage of successor employment
2 Firm birth, flow does not constitute a large percentage of successor employment
4 Not firm birth, flow constitutes a large percentage of successor employment
5 Not firm birth, flow does not constitute a large percentage of successor employment

Details for variable PRED_SIZE_CLASS_UI on SPF_ZZ

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Description

Size class of predecessor based on UI data (B employment in qtime)

Codebook

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Value Label
2 Predecessor <5 employment on UI
2 Predecessor 5-19 employment on UI
3 Predecessor 20-49 employment on UI
4 Predecessor 50-99 employment on UI
5 Predecessor 100-249 employment on UI
6 Predecessor 250-499 employment on UI
7 Predecessor 500+ employment on UI

Details for variable SUCC_SIZE_CLASS_UI on SPF_ZZ

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Description

Size class of successor based on UI data (M employment in qtime+1)

Codebook

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Value Label
1 Successor <5 employment on UI
2 Successor 5-19 employment on UI
3 Successor 20-49 employment on UI
4 Successor 50-99 employment on UI
5 Successor 100-249 employment on UI
6 Successor 250-499 employment on UI
7 Successor 500+ employment on UI

Details for variable SOURCE on SPF_ZZ

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Description

Data source of link between firms

Codebook

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Value Label
ES Link provided on QCEW
UI Sufficient flow found in UI earnings data
UIES Sufficient flow found in UI earnings data and QCEW link