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New Employer Business Trends: A Methodological Note

The New Employer Business Indicators have been compiled in an effort to provide information on new employer businesses, a subset of all entrepreneurial activity. The series provides users with measures to estimate and track trends in the emergence of these businesses, their representation in the population and among all firms, and the time it takes these businesses to make a first payroll.

Abstract: New employer businesses are of interest because of their important contributions to the economy via job creation. Using a new data series from the U.S. Census Bureau – the Business Formation Statistics – and two other administrative data sources, we create four indicators (rate of new employer business actualization, rate of new employer businesses, new employer business velocity, and employer business newness) and a composite index to track the emergence and speed of new employer business, which are comparable across time and geography. The purpose of these indicators is to provide comparable measures about new employer businesses. This paper describes the methods used to create the New Employer Business Indicators used by the Ewing Marion Kauffman Foundation.

Keywords: entrepreneurship, new employer business, indicator, jobs

Acknowledgements: The authors thank Emin Dinlersoz, Robert Fairlie, Brian Headd, A.J. Herrmann, Hayden Murray, and Derek Ozkal.

Research Working Papers have not necessarily been peer-reviewed, and are made available by the Ewing Marion Kauffman Foundation to share research and encourage discussion. The views and findings expressed herein are those of the authors and do not reflect the official views of the Kauffman Foundation.