More work is required to determine the exact nature of that relationship, but whether through a demand channel or financing mechanism, it is clear that young firms experienced disproportionate declines in states most affected by the housing market collapse during the recession. Young firms have also not bounced back with their usual vigor.
To the extent that they have bounced back, however, the "Return of Business Creation" paper presents maps that illustrate the increased share of new business formation in most states and, for the first time, metro areas across the nation.
Sparsely populated states such as North Dakota, Wyoming and West Virginia saw the largest percentage increases, albeit from low bases. Louisiana and Mississippi experienced the largest declines.
The Business Dynamics Statistics (BDS) series compiled by the U.S. Census Bureau tracks the annual number of new businesses (startups and new locations) from 1976 to 2011. More information about the BDS can be found at the Census Department.
The BDS represents what can credibly be deemed the gold standard of business creation data. In contrast to other indicators that combine employer firms (those coming into existence with employees) together with non-employers and self-employment, the BDS tracks only employer companies.
It also allows researchers to separate firms (unique businesses) from establishments (multiple locations of single firms, such as a new Starbucks location) and make important advances in data collection and policymaking.
Leveraging Regional Assets: Insights from High-Growth Companies in Kansas City
Kauffman Firm Survey Series
This report is part of a series using Business Dynamics Statistics data.