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Just Passing Through: Characterizing U.S. Pass-Through Business Owners

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  • Nathan Goldschlag
  • J. Daniel Kim
  • Kristin McCue

Abstract

We investigate the use of administrative data on the owners of partnerships and S-corporations to develop new statistics that characterize business owners. Income from these types of entities is "passed through" to owners to be taxed on the owners' tax returns. The information returns associated with such pass-through entities (Form K1 records) make it possible to link individual owners to the businesses they own. These linkages can be leveraged to associate measures of the demographic and human capital characteristics of business owners with the characteristics of the businesses they own. This paper describes measurement issues associated with administrative records on these pass-through entities and their integration with other Census data products. In addition, we document a number of interesting trends in business ownership among pass-through entities. We show a substantial decline in both entry and exit with less churn among both owners and owned businesses. We also show that the owners of pass-through entities are older, more likely to be male, and more likely to be white compared to the working population.

Suggested Citation

  • Nathan Goldschlag & J. Daniel Kim & Kristin McCue, 2017. "Just Passing Through: Characterizing U.S. Pass-Through Business Owners," Working Papers 17-69, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:17-69
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    File URL: https://www2.census.gov/ces/wp/2017/CES-WP-17-69.pdf
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    References listed on IDEAS

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    1. Henry Hyatt & James Spletzer, 2013. "The recent decline in employment dynamics," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-21, December.
    2. Michael Cooper & John McClelland & James Pearce & Richard Prisinzano & Joseph Sullivan & Danny Yagan & Owen Zidar & Eric Zwick, 2016. "Business in the United States: Who Owns It, and How Much Tax Do They Pay?," Tax Policy and the Economy, University of Chicago Press, vol. 30(1), pages 91-128.
    3. Fairlie, Robert W. & Lofstrom, Magnus, 2013. "Immigration and Entrepreneurship," IZA Discussion Papers 7669, Institute of Labor Economics (IZA).
    4. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
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    Cited by:

    1. Joonkyu Choi & Nathan Goldschlag & John Haltiwanger & J. Daniel Kim, 2019. "Founding Teams and Startup Performance," Working Papers 19-32, Center for Economic Studies, U.S. Census Bureau.
    2. Pierre Azoulay & Benjamin F. Jones & J. Daniel Kim & Javier Miranda, 2020. "Age and High-Growth Entrepreneurship," American Economic Review: Insights, American Economic Association, vol. 2(1), pages 65-82, March.
    3. Adela Luque & Renuka Bhaskar & James Noon & Kevin Rinz & Victoria Udalova, 2019. "Nonemployer Statistics by Demographics (NES-D): Using Administrative and Census Records Data in Business Statistics," Working Papers 19-01, Center for Economic Studies, U.S. Census Bureau.
    4. Adela Luque & Michaela Dillon & Julia Manzella & James Noon & Kevin Rinz & Victoria Udalova, 2019. "Nonemployer Statistics by Demographics (NES-D): Exploring Longitudinal Consistency and Sub-national Estimates," Working Papers 19-34, Center for Economic Studies, U.S. Census Bureau.

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    • K1 - Law and Economics - - Basic Areas of Law

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