The 2010 Kauffman Interagency Forum on Entrepreneurship and Innovation Data (on June 4) brought together more than 50 representatives from the federal statistical community, academia, and other interested parties to talk about upcoming changes to ways in which the federal statistical agencies will be collecting data.  The level of interaction among the agencies at the Forum and real interest in overall improvements was heartening to see.  We were privileged to be the conveners of this conversation but clearly the hard work of making progress on entrepreneurship and innovation measurement is underway at the agency level.  The Forum was mostly meant for in-person conversations and interaction but the agencies presenting did consent for us to post their PowerPoints for those interested.  Below are the presentations and a couple of highlights from my perspective of their work.

Bureau of Labor Statistics (QCEW PPT and NLSY PPT)

• BLS plans to release a new series of tables on age and survival of the establishment (and firm, I believe) in August 2010 as a part of the Business Employment Dynamics series.  This will add to the flood of new data becoming available on cohorts of firms and should prove interesting to compare with the Census Bureau's Business Dynamics Statistics. 
• Birth and Death counts, without suppressions, by detailed industry and county are in the works.  The concept of county-level business data without suppression is something which should excite a lot of local researchers and economic development agencies as most county-level data has to be aggregated to a level which is frustrating for looking at specific industries.
• The National Longitudinal Survey of Youth is collecting data on their 1979 cohort related to activities in business ownership and patenting.  While not available for another two years it should be rich data for researchers.

Census Bureau (PPT)

• Updates are underway to the Business Dynamics Statistics that will bring it up to the end of 2008 and likely produce more useful tables for following cohorts of firms over time at the state level.  
• Synthetic microdata will be available through the Cornell RDC in the fall for the Longitudinal Business Database.  This will be interesting to watch as synthetic microdata isn't actual data but rather a data set which has been built off of real data but with crucial changes to aspects of the data to ensure confidentiality of individual responses.  I think the consensus on synthetic microdata is still out but its definitely one of the emerging solutions to providing microdata access to government data in an era of increasing confidentiality concerns with putting public-use microdata files on the Internet.
• I am really excited to see that the integration of characteristics of business owners into the business data is finally on the agenda in an ongoing manner.  There is so much potential for new useful public products here like women in high-tech businesses or high-growth minority businesses.  Many policy interventions are aimed at underrepresented minority groups in entrepreneurship and this has the potential to finally allow for tracking of changes in this arena annually, not just every five years, which is currently the most up-to-date data available matching business and ownership characteristics.

Federal Reserve Board (PPT)

• The Federal Reserve didn't have huge updates for the room but did talk about their impromptu panel of households from the 2007 Survey of Consumer Finance who were contacted in 2009 again.  Specific questions were included relating to the changes in business ownership among the panel which will help to inform some aspects of our understanding about the impact of the financial crisis on business-owning households.

National Science Foundation (PPT)

• Anyone following NSF's innovation surveys over the last decade knows that this is a time of huge payoff for them.  After much review, planning, and pain, the new Business  R&D and Innovation Survey (BRDIS) is finally available to the public.  And while the current releases are on 2008 collections, improvements made in 2009 look very positive are likely to provide even more meaningful information.
• Quite a bit of the discussion came around what to do on measuring technology commercialization in the university space.  NSF indicated a new report should be coming out soon from an external group with recommendations for them on that topic.  I'll be following up with that and adding more commentary then.
• The Microbusiness Innovation Survey is very early in development but still promises to be the most exciting possible change underway in the next few years in our understanding of innovation in the U.S.    NSF is showing real leadership in taking on this survey and considering what topics are most appropriate to get innovation activities in very small businesses.  More expert meetings and user groups are planned for this fall into 2010.

Patent and Trademark Office(PPT)

• Did you know that the Patent and Trademark Office now has a chief economist?  Well, Stuart Graham, the first occupant of this seat, is really taking the lead in improving the data the PTO makes available from their work.  
• The PTO has recently done a bulk upload of information to Google and has plans for many future transfers of patent and trademark data. 
• The PTO is also actively looking at what other agencies would make sense to partner in matching PTO data into more traditional statistical agency products.  The PTO isn't really a statistical office (at least yet) so I think they are smart to look at partnerships that could produce really meaningful new information. 

A new paper out from the National Bureau of Economic Research - “Dynamic Text-Based Industry Classifications and Endogenous Product Differentiation” by Gordon M. Phillips and Gerard Hoberg - discusses the power large-scale text analysis can provide in examining industrial classifications and other traditionally nebulous areas of differentiation among firms and markets. 


This is a timely publication as the Office of Management and Budget (OMB) is in the final stages of seeking approval (and feedback) about the 2012 revisions to the North American Industrial Classification System.  While there is a lot of effort made to update these industry classifications unfortunately I do not believe that government officials are yet taking advantage of some of the methods which are described in this paper which mine existing data to look for discontinuities in how industries are defined, when firms change industries, or other aspects of industrial organization. 

Now, the prospect of the government performing large-scale text analysis like this might scare some, but in my mind, there are groups like the Center for Economic Studies at the Census Bureau or other places like the Statistics of Income Division at the Internal Revenue Service who could do this responsibly if given the mandate, funding, and some lead time.  These places house large quantities of text data yet maintain separate research functions and most importantly they maintain processes for seeking outside researcher proposals for cutting edge research which would benefit the agencies through improved data products.  I’ve never heard staff at either of these locations discuss this NAICS redesign as a high priority but perhaps if OMB were using their coordinating powers and discretionary funding with more force, that could change. 

Identifying new industries clusters, and other big changes in the industrial organization faster and more accurately remains a key deficiency in the current national statistical system.  The U.S. regions who are on the front line of economic development rely too much on private data to try to understand change in their economies because the federal system has too often missed the data needs of the diffused customers here.  Coincidentally, the Council for Community and Economic Research annual conference starts today in Washington, DC.  This is the most organized group of individuals advocating for improved regional economic statistics in the United States. 

I should note that while there is great potential power in the methods employed by Phillips and Hoberg, the authors also note the potential gaming which could be used by firms if they felt the text they were sharing could be manipulated to effect government policies to the firms advantage.  “We also note that
while our new measures are interesting for research or scientific purposes, they would not be good for policy and antitrust purposes as they could be manipulated by firms fairly easily if firms believed they were being used by policy makers.”  I think these methods would be best added to an existing review process and not seen as a substitute.  In that case, the ability to game the system could be reduced. 

States are in bad fiscal shape.  Horrible, actually.  And as such, entrepreneurship and innovation support programs are likely to be facing tough fiscal environments for years to come.  While a recent Wall Street Journal article highlights many of the things that states are doing to avoid scaring off businesses, I fear that law makers will focus most of their efforts on existing or small business (rather than new or growing businesses). 

While going from state budgets to the U.S. Census Bureau's decennial census might seem like a big leap, a new paper out of the Brookings Institution on the geographic distribution of funds resulting from the decennial census should call the attention of all organizations concerned with state funding environments to the need to support the decennial census.  This is crunch time for the decennial with surveys being mailed out this month.  I got a pre-survey mailing next week and can't wait to see the actual document! 

This year the Census Bureau finally received full funding of their plan to expand coverage of the service sector.  On Friday, March 12, the Brookings Institution will host a workshop that will examine this expanded service sector work.  I won't be there but this is without a doubt among the most important improvements underway to our timely measurement of the economy. 

My colleague, Dane Stangler, has a new report out today in Kauffman's series looking at business dynamics.  Today's report, High Growth Firms and the Future of the American Economy, is a really easy and compelling read highlighting the importance of considering new and young firms as the United States works to advance job growth.  Anyone who read Dane's piece from last fall, Where Will the Jobs Come From, will enjoy this addition as well. 

What I like best about Dane's new report is that it doesn't gloss over really complicated topics like change and the nature of competition between entering businesses and established businesses.  It also provides good statistics on the nature of growing businesses in 2007 such as:

• "Gazelle" firms (ages three to five years old and fast growing) comprise less than 1 percent of all companies, yet generate roughly 10 percent of new jobs in any given year.
• The "average" firm in the top 1 percent of the growth distribution contributes 88 jobs per year.  The average firm in the economy as a whole, on the other hand, adds two or three net new jobs each year.

The report goes on to offer a series of policy recommendations for officials working to promote this population of businesses.

The 2008 U.S. Global Entrepreneurship Monitor (GEM) report was released this week from Babson and Baruch Colleges.  Showing significantly different trends from the Bureau of Labor Statistics data which was included for the U.S. in the report from Organisation for Economic Co-operation and Development (OECD) which I highlighted last week, GEM found increasing trends in "total entrepreneurial activity" in 2008.

For those of you not familiar with GEM, it is collected through a household survey in participating countries on activities related to nascent entrepreneurship - people in the process of starting a business - and people running young businesses.  In that sense, GEM is probably closest in measurement concepts to the Kauffman Index of Entrepreneurial Activity (KIEA).  GEM has the advantage of explicitly asking about activities related to nascent entrepreneurship while the KIEA takes advantage of a large-scale government survey to look at transitions from being employed by someone else to being self-employed or a business owner.  And while GEM reports to have a large enough sample size to disaggregate different types of growth trajectories, I don't believe it is really possible with a sample size of 2,000 for the whole United States.  Perhaps if they had a sample size which was twice its current size. 

It used to be that GEM was one of the first indicators to the hit the presses, making it of particular interest to the policy community since official statistics have historically been laggards.  But that is no longer the case.  Indeed, besides the Kauffman Index of Entrepreneurial Activity and the OECD reports, I know that the Census Bureau is getting very close to releasing its updated Business Dynamics Series through 2008 and the NETS database has 2008 data out (I'll be posting on that more in the next couple of days).  If GEM loses its timeliness factor and there continue to be concerns on the squishiness of the data it collects, then I fear the last legs of this effort might come off.  It is an effort with many merits, which is why we were involved as a funder for many years - don't get me wrong.  Being able to buy time on omnibus surveys can be very economical and as such I still know many researchers who utilize this function. 

The Census Bureau's Local Employment Dynamics (LED) has a call for papers out for its March 10-12, 2010, conference in Washington, D.C.  This is a program with some already innovative products such as On the Map which looks at where workers are employed compared to where they live, but in my estimation, LED has only just begun.  It is a program which will only become full funded in the next couple of years, if things go well, but the possibilities of useful products are almost endless.  Work is underway, as I understand, at Census to expand the matched data to include the self-employed as well as to look more specifically at products which would be of interest to different audiences such as regional and state policy makers. 

We (and I mean the big we, not just Kauffman) are obsessed with jobs right now, and rightfully so.  While the economy appears to be turning a corner, unemployment continues at stubbornly high rates.  The Bureau of Labor Statistics (BLS) should be out with updated unemployment statistics within the next few days but several private sector reports on jobs came through more positive (see Wall Street Journal article for a good summary of these statistics). 

At Kauffman, we have been digging into jobs data over the last couple of months thanks to some special tabulations from the Census Bureau.  Today, Kauffman released the first white paper in a series which will attempt to make sense of these tabulations as well as a host of other data becoming available from BLS, the Organisation for Economic Co-operation and Development, and Eurostat.  The current paper attempts to make the point that young firms (many of which are small) not just small businesses, generally, are the most active net job creators in the United States.  Haltiwanger, Jarmin, and Miranda find similar things in a working paper analysis using similar data sources. 

The 2008 American Community Survey (ACS) is now available from Census.  It includes some limiited information on occupation and work status over the last year, including self-employment. 

I have neglected to mention a couple of popular data releases from the Census Bureau in the last few months.  Unfortunately, these are not 2008 or 2009 data, which is the time period everyone really wants currently. 

• County Businss Patterns, 2007 (to the zip code level)

• Business Expenses, 2007 (Retail, Wholesale, and Services)

• Nonemployers, 2007