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Declining Business Dynamism: What We Know and the Way Forward

Author

Listed:
  • Ryan A. Decker
  • John Haltiwanger
  • Ron S. Jarmin
  • Javier Miranda

Abstract

A growing body of evidence indicates that the U.S. economy has become less dynamic in recent years. This trend is evident in declining rates of gross job and worker flows as well as declining rates of entrepreneurship and young firm activity, and the trend is pervasive across industries, regions, and firm size classes. We describe the evidence on these changes in the U.S. economy by reviewing existing research. We then describe new empirical facts about the relationship between establishment-level productivity and employment growth, framing our results in terms of canonical models of firm dynamics and suggesting empirically testable potential explanations.

Suggested Citation

  • Ryan A. Decker & John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2016. "Declining Business Dynamism: What We Know and the Way Forward," American Economic Review, American Economic Association, vol. 106(5), pages 203-207, May.
    • Handle: RePEc:aea:aecrev:v:106:y:2016:i:5:p:203-07
    Note: DOI: 10.1257/aer.p20161050
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    References listed on IDEAS

    as
    1. Chiara Criscuolo & Peter N. Gal & Carlo Menon, 2014. "The Dynamics of Employment Growth: New Evidence from 18 Countries," CEP Discussion Papers dp1274, Centre for Economic Performance, LSE.
    2. Dan Andrews & Chiara Criscuolo & Peter N. Gal, 2015. "Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries," OECD Productivity Working Papers 2, OECD Publishing.
    3. Ryan Decker & John Haltiwanger & Ron Jarmin & Javier Miranda, 2014. "The Role of Entrepreneurship in US Job Creation and Economic Dynamism," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 3-24, Summer.
    4. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Yellen, Janet L., 2017. "The Economic Outlook and the Conduct of Monetary Policy : a speech at the Stanford Institute for Economic Policy Research, Stanford University, Stanford, California, January 19, 2017," Speech 935, Board of Governors of the Federal Reserve System (U.S.).
    2. John G. Fernald & Robert E. Hall & James H. Stock & Mark W. Watson, 2017. "The Disappointing Recovery of Output after 2009," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 1-81.
    3. Miguel Casares Polo & Hashmat Khan & Jean-Christophe Poutineau, 2018. "A structural analysis of US entry and exit dynamicsn," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1801, Departamento de Economía - Universidad Pública de Navarra.
    4. Niklas Engbom, 2018. "Firm and Worker Dynamics in an Aging Labor Market," 2018 Meeting Papers 1009, Society for Economic Dynamics.
    5. Richard Dunn & Brent Hueth, 2016. "Food and Agricultural Industries: Opportunities for Improving Measurement and Reporting," Working Papers 16-58, Center for Economic Studies, U.S. Census Bureau.
    6. David M. Byrne & John G. Fernald & Marshall B. Reinsdorf, 2016. "Does the United States Have a Productivity Slowdown or a Measurement Problem?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 109-182.
    7. Atkinson, Tyler & Duca, John V., 2017. "Equity Regulation and U.S. Venture Capital Investment," Working Papers 1707, Federal Reserve Bank of Dallas.
    8. repec:pal:buseco:v:52:y:2017:i:3:d:10.1057_s11369-017-0042-4 is not listed on IDEAS
    9. Miguel Casares & Hashmat Khan & Jean-Christophe Poutineau, 2018. "A Structural Analysis of US Entry and Exit Dynamics," Carleton Economic Papers 18-02, Carleton University, Department of Economics.
    10. William Lincoln & Andrew McCallum & Michael Siemer, 2018. "The Great Recession and a Missing Generation of Exporters," 2018 Meeting Papers 558, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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