Producer Dynamics: New Evidence from Micro Data

Producer Dynamics: New Evidence from Micro Data

Producer Dynamics: New Evidence from Micro Data

Producer Dynamics: New Evidence from Micro Data

Excerpt

The process of firm entry, growth, and exit has always been an integral part of the mechanism of resource reallocation in a market economy. Spurred by developments in micro data construction by government statistical agencies and access to these data by researchers, the empirical analysis of producer dynamics has become a major focus of economic research over the last fifteen years. The crucial input that has made the empirical study of producer dynamics possible is comprehensive longitudinal micro data that allow researchers to track new firms over their lifetimes. Using these data for a large number of countries, researchers have identified links between the characteristics of firms and their subsequent success or failure that provide a better understanding of the sources of firm and worker dynamics and their implications for the long-run growth and performance of a market economy. In recognition of its importance to public policymaking, the primary U.S. statistical agencies—the Census Bureau and the Bureau of Labor Statistics (BLS)—have recently begun to produce official statistics that measure the dynamic movements of firms in and out of business and workers in and out of jobs.

The development of new data resources and empirical facts on producer dynamics has impacted many research fields in economics including industrial organization, labor, growth, macro, and international trade. Since the initial measurement studies of Dunne, Roberts, and Samuelson (1988, 1989), the longitudinal data sets have been exploited by industrial organi-

Timothy Dunne is a senior economic advisor in the Research Department of the Federal
Reserve Bank of Cleveland. J. Bradford Jensen is an associate professor in the McDonough
School of Business, Georgetown University, and a research associate of the National Bureau
of Economic Research. Mark J. Roberts is a professor of economics at Pennsylvania State
University, and a research associate of the National Bureau of Economic Research.

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