2/15/2011 8:32:56 AM By
E.J. Reedy
Is job-lock (the locking of a person into a specific job beyond when they would like to be there) occurring in the U.S.? Are entrepreneurs being forced to stay in wage jobs, working for someone else, because of the fear of losing their health insurance? Below are a few pieces of research/data sources that I've come across recently that are attempting to make research contributions to this question. But before I comment on them and their source data, it has to be said that all of these research efforts are attempting to get at the impact of health insurance provision on entrepreneurial entry in the United States but because of limitations in how the data is collected none of the efforts really gets at the
real issue. Simply put, there is a belief that more potentially innovative nascent entrepreneurs are kept from starting a business (or doing so full-time) because they are tied to a job in which they receive health insurance. None of these data sources/research is able to ask this exact question and realizing the limits of their data to the analysis is critical. Someday, I hope there will be some data that can really inform this question more directly, but I am not currently aware of any such data in development. I certainly am of the crowd that believes this problem to be huge.
- Two sets of authors (Maria Minniti and Yunwei Gai; Ian Michael Breunig) have papers out using the Medical Expenditures Panel Survey at Department of Health and Human Services. This data is rich in that it gives information on where the insurance is coming from and also the work experience of all primary members of the house. The downside of this data in my mind is that it forces the authors to use a self-employment measure for entrepreneurship, which is not typically associated with high-growth firms.
- Rob Fairlie, Kanika Kapur, and Susan Gates in a forthcoming journal article Is Employer-Based Health Insurance a Barrier to Entrepreneurship? take a look at the Current Population Survey and specifically make use of it's unique design to track transitions to self-employment around the age 65. As such the authors are able to infer inhibitions at the time individuals become eligible for government-backed insurance and make attempts to measure job lock more broadly from this population.
- Scott Shane and Alicia Robb have analyzed the Kauffman Firm Survey questions asked of its panel of new businesses started in 2004 and finds little evidence of significant annual change in health insurance provision among the panel.
Past posts related to health insurance:
2/14/2011 5:58:00 AM By
E.J. Reedy
The events of the last month in Egypt and the Middle East have had me thinking some about the forces that can drive change. One of strange parts of about the space that I occupy, not being in a stat agency and not being an academic, is I that get an outsider’s perspective of what is happening within and across these institutions. This is particularly helpful in watching how change happens within these organizations. I wanted to reflect a bit on some observations about the global statistical system, specifically the informal international network of governmental statistical offices and officials that produce the data which we rely upon to understand our economies, our people, and all aspects of our world.
I don’t know what I’d call these musings but I think when looked at together there are some truths here that can be helpful in particular to academics who might over the course of their careers only have an opportunity to work with statistical agencies once or twice. I have talked to a lot of academics (and others) who might want to see improvements in certain data, release of certain data, coordinated collection of surveys, or the like. Most academics are befuddled by national statistical offices and their bureaucratic ways. There is little academic training given to understanding project management, partner coordination, etc. – all things which are critical to getting data collected, produced, etc. Consider this a short primer but also a larger consideration about how the system informally operates.
While we would like to pretend that all countries are playing with an identical deck of power and influence in national statistics, the reality is that three players wield unusual power and influence on the direction of the global statistical system. Innovative measurements and production of new and meaningful series by a relatively small country, say Chile or Belarus, are very unlikely to be replicated or noticed internationally without the attention or interest of one of the three trump statistical players. Recognizing where and how power centers are shifting in the statistical community is important for those of us trying to drive improvements in data and for researchers attempting to see cross-country studies replicated.
The Fading Trump
The first trump that I recognized in my job was the United States. Simply put, in the production of innovation and entrepreneurship data, if equivalent data is not produced on the United States (and if people don’t believe the results), any international comparison is doomed. As a Foundation whose main focus is production of data on these topics in the U.S., we were often approached about funding or supporting U.S. replications of data series and research. While this was a particularly powerful position for the U.S. in the 2000s, post-crisis it seems this trump has diminished. Now, while most efforts would like to have the U.S.’s involvement, countries have tended to have more interest in more timely and meaningful national-level data, with much less importance given to comparing their results to the U.S. benchmark. The U.S. has never fully taken advantage of its potential power as a statistical leader, too often relinquishing involvement in international efforts to gather improved data. Driving the global conversation was a space the Canadians really saw outsized-power with until recently with the gutting of many of their statistics programs.
The Suit Bigger than All the Others
The quiet behemoth of internationally comparable statistics is Eurostat, the European Union’s statistical office. While they have wielded some power since their establishment, my own experience is that just as the European Union’s powers have broadened in policy and other rights, Eurostat’s power to drive the international statistical conversation has increased. In our own experience, the signing-on of Eurostat to the Entrepreneurship Indicators project at the OECD, which we funded, was a significant milestone in driving internationally-replicative data. With the ability to drive statistics coming from 27 member countries, Eurostat is both blessed and cursed. The blessings in terms of potential replicants are easy to see but the curses are a bit more hidden. One significant curse is the limited ability of Eurostat to drive implementations which ALL member countries don’t agree to. Hence, the sovereignty of data production remains at the state-level and can sometimes lead to the dumbing down of mandatory statistics. A lack of microdata access and a mandate that is too inwardly focused have limited their global power.
The Rising Trump
While no expert would currently identify China as a global statistical leader, from what I see in the academic world I have no doubt its power in global statistics is also rising. While researchers doing cross-country studies of entrepreneurship and innovation are a limited bunch, it feels as if almost all the proposals I see for collections in this area involve China and X. And with the OECD’s increased focus on non-member economies, it is certainly trying to get China and other BRIC national statistical offices to join the global conversation. So far, this seems about the only potential international source of power that China has not systematically tried to take advantage of in its development efforts. From my understanding and time living/traveling there it would seem there is still some distrust of official statistics and too much information about the activities within the country. India is a country that has a huge history of measurement and record keeping but still lacks many of the basic infrastructures for modernization.
2/11/2011 6:03:58 AM By
E.J. Reedy
On the heels of my posting earlier this week describing
global trends in small business lending, the U.S. has
new national and state-level data available today from the Small Business Administration. While I would like to say that this data is about "small businesses" I would reminder readers that really these are data about "small loans" (under $1,000,000) and really small loans (under $100,000). While this might be a proxy for small business lending, I don't think anyone can legitimately argue that it's a full representation of the reality. That said, it's the best we have in the U.S. currently. Arg.
The SBA is reporting a smaller decrease in all categories measured than was seen in 2008-9. But a decrease is still a decrease; it seems the mid-tier loans ($100,000-$1,000,000) continued to be the hardest hit. Specifically the study found "the smallest business loans under $100,000 began to stabilize in 2009-2010—the total was down by 1 percent...[overall] small business lending dropped by 6.2 percent, less than the 8.9 percent drop experienced in large firm lending over the 2009-2010 period."
One new feature of the SBA's website this year seems to be better automation of the data tables and information underlying the state-level data. I think this is something that many scholars studying state-level effects will have some interest in. The data still suffers greatly from the bias of not knowing where the businesses were located that received the loans. For example, Bank of America only shows up in the North Carolina data (from those spreadsheets I examined) since it's headquarters is there. Still, I like the increasing accessibility of this data from the SBA.
2/9/2011 8:21:53 AM By
E.J. Reedy
For those of you who are not experts in data dissemination but want a crash course, start with tomorrow's event in Washington, DC.
"Responsible Data Sharing in the 21st Century" will be hosted by University of Chicago NORC and the National Institute for Standards and Technology. Sadly, I can't attend in person, but am happy to report my colleague Alicia Robb will be presenting. She'll be discussing our
private sector experience in disseminating the Kauffman Firm Survey but most of the speakers are from government and will be discussing their various experiences.
I really hope people are coming to learn because the truth is that as a community of data stewards we are still making many more failures in disseminating our data than successes. Here I don't mean failure in the sense of a data breach but rather the science behind what scholars and communities need in addition to data access is still in its infancy. With the Kauffman Firm Survey we've tried to be a real-time laboratory on these activities, testing new modes of dissemination, programs to support outreach, as well as coaching and training. So we sincerely hope others can learn from our successes and failures in data dissemination and we look forward to hearing about similar experiences.
2/8/2011 6:04:56 AM By
E.J. Reedy
I have spent a good deal of time over the last four years working on surveys asking individual companies about how their business activities are financed. It’s been amazing in that process to see how differently the topic must be discussed in Europe and the United States. Specifically, topics like credit card financing, which are a mainstay of U.S. surveys, don’t event make an extended pick-list of financing types used by most European small businesses. I bring this up to illustrate that international comparisons of financing mechanisms for small business are a tricky thing. And yet, we all yearn for more comparable data (or any data at all!). Today I wanted to describe a couple of fairly recent surveys focused on small business financing data internationally.
Asking the Firm about Financing
Completed every six months, the
European Central Bank Access to Finance of SMEs is a large-scale survey of establishments in the EU zone looking at changes in conditions but not gathering nominal values of loans. It has a nice
questionnaire that keeps things simple although the overall effort is a bit limited in that it's bypassing official statistical systems and doesn't have the ability, as I understand it, to link reported credit conditions to firm outcomes in later periods. It's most recent report summarized that “between March and September 2010 the proportion of SMEs reporting a worsening in access to bank loans, at 24%, almost halved compared to the previous survey, when it stood at 42%. At the same time, 12% of SMEs reported an improvement in access to bank loans, compared with 10% in the previous round.” This seems to show that the debt financing options for European SMEs are still getting worse but not as quickly. This is a good example of a survey gathering perceptions from businesses. The recently reviewed
NFIB survey also comes to mind here.
Asking the Regulator (or Bank) about Financing
The other route that can be followed in gathering data is to go to the providers of capital. In most cases, in small business financing this means looking to providers of debt capital. A new paper by the World Bank titled “
Small and Medium Enterprises: A Cross-Country Analysis with a New Data Set” describes an aggregation of SME financing data of this types from multiple countries around the world. This arises from some of the efforts of the World Bank and G-20 to aggregate data from central banks and other administering agencies about the size and quantity of loans to small businesses in their country. Asking regulators about loans is quite different than the above described establishment surveys. The advantage of the second approach is that it’s much cheaper but as the authors outline, there are huge definitional differences across countries in how SMEs are defined.
From
table 2 of “Small and Medium Enterprises: A Cross-Country Analysis with a New Data Set”
The above shows the U.S. definition which centers on loan size, not employees or revenues of the business; I find this to be highly unsatisfactory. So while I applaud this G-20/World Bank effort, I personal still don’t think it’s a full substitute for a quality establishment survey. That said, outlining some of these differences in definitions is the first step in pushing towards further agreement on appropriate definition and comparability. The authors have tried to make global estimates on the size of small business lending, finding that $10 trillion flows annually to small business loans but that this is disproportionately higher in developed economies. Additionally, they believe the differences in definitions are not driving the difference between developed and developing economy levels of small business financing.
A Gripe
While there is much to applaud in the ECB survey, they still have work to do in regard to their sample. Specifically, it does not appear to me that their sample is adequately covering new and young firms. While they have about 2 percent of firms responding that they are under 2 years of age, that is dwarfed by those firms age 2-4 years (8 percent of their sample). This would appear low by all estimates I can think of coming out of the OECD and other international sources. And indeed, in this turbulent time we have shown the importance of tracking new business finance separately as these are the firms most likely first effected by the downturn and any credit tightening. Take a look at Spain’s statistics on new business registrations, as an example, which have halved in the last year. The discussions about small business financings too often are portrayed as the same as new business financing. They are not and more effort needs to be made to have samples which allow for representative studies of credit conditions faced by new businesses.
A Compliment and A Call
But it’s great to be squabbling on the details of the ECB effort while the U.S. remains devoid of meaningful ongoing federal collections at the establishment level. Our own Kauffman Firm Survey is the only longitudinal effort collecting annual debt and equity injection information on U.S. businesses but it’s only one cohort. How we are not demanding more on business financing is baffling to me. Communities everywhere in the U.S. want to know what is happening with their small business credit conditions.
2/3/2011 8:27:30 AM By
E.J. Reedy
With unemployment rates stubbornly high and the global economy increasingly competitive, the United States needs to better understand businesses, policies to support businesses, and, ultimately, how to spur job creation. Jobs don’t just appear or disappear; they are created (and destroyed) by businesses that are reacting to market conditions and opportunities. While our national statistical system is increasing its capacity to produce statistics on these dynamic processes, policymakers could better target job creation programs if the statistical system collected more data about how businesses finance operations and investment in innovation, especially at the regional/local level. Further, to bolster the value of data currently produced, we need to nourish active data user communities to advance the substantive scientific understanding of job creation policies and educate policymakers about the importance and utility of the data.
Read more on the
AmStat website.
2/2/2011 7:13:14 AM By
E.J. Reedy
For some time there has been a growing argument in the statistical community about the need to go beyond measuring national well-being only in terms of Gross Domestic Product output (see
Marketplace story,
Newsweek,
OECD, or less independent sources such as
Sightline), but it seems to me that recent events in the Middle East will cement a place for measures beyond GDP. Specifically, I took note this morning of an
article from Gallup tracing the decline in reported wellbeing among Tunisians and Egyptians leading up to the current political changes. As Gallup reported, while GDP in both countries was increasing, the percentage of population reporting to be "thriving" decreased significantly in both countries. For Egypt, those thriving went from 29 percent in 2005 to 13 percent in 2008 and was at 11 percent in 2010. For Tunisia, the decline was from 24 percent in 2008 to 14 percent in 2010. So, if these two cases are to be believed, the Danish appear to be safe in their prospects for revolution and Bulgaria and Cambodia appear to have some concerns (
see overview from Gallup).