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The Role of Nonemployers in Business Dynamism and Aggregate Productivity

Author

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  • Pedro Bento
  • Diego Restuccia

Abstract

We examine the role of nonemployers in business dynamism and aggregate productivity. Between 1982 and 2014, the number of firms per worker including nonemployers increased by 41%. Using a model of firm dynamics, we derive implications for total factor productivity from changes in firms per worker and relative size distributions. Firm dynamics imply a 15.6% increase in aggregate productivity, compared with 2.1% growth when abstracting from nonemployers. Our results suggest that the productivity growth slowdown is not due to changes in net firm entry and highlight the quantitative importance of comprehensive measures of business dynamism in the US data.

Suggested Citation

  • Pedro Bento & Diego Restuccia, 2025. "The Role of Nonemployers in Business Dynamism and Aggregate Productivity," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 3(2), pages 165-198.
    • Handle: RePEc:ucp:jpemac:doi:10.1086/735032
    DOI: 10.1086/735032
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    Cited by:

    1. is not listed on IDEAS
    2. Akcigit, Ufuk & Dinlersoz, Emin & Greenwood, Jeremy & Penciakova, Veronika, 2022. "Synergizing ventures," Journal of Economic Dynamics and Control, Elsevier, vol. 143(C).
    3. Cockx, Bart & Desiere, Sam, 2024. "Labour costs and the decision to hire the first employee," European Economic Review, Elsevier, vol. 170(C).
    4. Bento, Pedro & Hwang, Sunju, 2023. "Barriers to black entrepreneurship: Implications for welfare and aggregate output over time," Journal of Monetary Economics, Elsevier, vol. 134(C), pages 16-34.
    5. Adela Luque & Vitaliy Novik, 2024. "Garage Entrepreneurs or just Self-Employed? An Investigation into Nonemployer Entrepreneurship," Working Papers 24-61, Center for Economic Studies, U.S. Census Bureau.
    6. Pedro Bento, 2020. "Female Entrepreneurship in the U.S. 1982 - 2012: Implications for Welfare and Aggregate Output," Working Papers 20201201-001, Texas A&M University, Department of Economics.
    7. Bento, Pedro, 2025. "Female entrepreneurship in the U.S. 1982–2012: Implications for welfare and aggregate output," Journal of Monetary Economics, Elsevier, vol. 149(C).
    8. Pedro Bento, 2021. "Trade without “scale effects”," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 1252-1274, November.
    9. Innessa Colaiacovo & Margaret G. Dalton & Sari Pekkala Kerr & William R. Kerr, 2022. "The Transformation of Self Employment," NBER Working Papers 29725, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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