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Business Formation: A Tale of Two Recessions

Author

Listed:
  • Emin Dinlersoz
  • Timothy Dunne
  • John Haltiwanger
  • Veronika Penciakova

Abstract

The trajectory of new business applications and transitions to employer businesses differ markedly during the Great Recession and COVID-19 Recession. Both applications and transitions to employer startups decreased slowly but persistently in the post-Lehman crisis period of the Great Recession. In contrast, during the COVID-19 Recession new applications initially declined but have since sharply rebounded, resulting in a surge in applications during 2020. Projected transitions to employer businesses also rise but this is dampened by a change in the composition of applications in 2020 towards applications that are more likely to be nonemployers.

Suggested Citation

  • Emin Dinlersoz & Timothy Dunne & John Haltiwanger & Veronika Penciakova, 2021. "Business Formation: A Tale of Two Recessions," Working Papers 21-01, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:21-01
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    File URL: https://www2.census.gov/ces/wp/2021/CES-WP-21-01.pdf
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    Citations

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    Cited by:

    1. Richard Beem & Christopher Goetz & Martha Stinson & Sean Wang, 2022. "Business Dynamics Statistics for Single-Unit Firms," Working Papers 22-57, Center for Economic Studies, U.S. Census Bureau.
    2. Catherine E. Fazio & Jorge Guzman & Yupeng Liu & Scott Stern, 2021. "How is COVID Changing the Geography of Entrepreneurship? Evidence from the Startup Cartography Project," NBER Working Papers 28787, National Bureau of Economic Research, Inc.
    3. Crane, Leland D. & Decker, Ryan A. & Flaaen, Aaron & Hamins-Puertolas, Adrian & Kurz, Christopher, 2022. "Business exit during the COVID-19 pandemic: Non-traditional measures in historical context," Journal of Macroeconomics, Elsevier, vol. 72(C).
    4. Jose Asturias & Emin Dinlersoz & John Haltiwanger & Rebecca Hutchinson & Alyson Plumb, 2021. "Business Applications as a Leading Economic Indicator?," Working Papers 21-09, Center for Economic Studies, U.S. Census Bureau.
    5. Catherine Buffington & Daniel Chapman & Emin Dinlersoz & Lucia Foster & John Haltiwanger, 2021. "High Frequency Business Dynamics in the United States During the COVID-19 Pandemic," Working Papers 21-06, Center for Economic Studies, U.S. Census Bureau.
    6. Albert, Christoph & Caggese, Andrea & González, Beatriz & Martin-Sanchez, Victor, 2023. "Income inequality and entrepreneurship: Lessons from the 2020 COVID-19 recession," Journal of Banking & Finance, Elsevier, vol. 149(C).
    7. John Haltiwanger, 2022. "Entrepreneurship in the twenty-first century," Small Business Economics, Springer, vol. 58(1), pages 27-40, January.
    8. Cindy Cunningham & Sabrina Wulff Pabilonia & Jay Stewart & Lucia Foster & Cheryl Grim & John Haltiwanger & Zoltan Wolf, 2021. "Chaos Before Order: Productivity Patterns in U.S. Manufacturing," International Productivity Monitor, Centre for the Study of Living Standards, vol. 41, pages 138-152, Fall.
    9. Masato Oikawa & Koichiro Onishi, 2025. "Impact of financial support expansion on restaurant entries and exits during the COVID-19 pandemic," Small Business Economics, Springer, vol. 64(2), pages 645-689, February.
    10. Darmouni, Olivier & Sutherland, Andrew, 2024. "Investment when new capital is hard to find," Journal of Financial Economics, Elsevier, vol. 154(C).
    11. Kyung Min Lee & John S. Earle & Lokesh Dani & Ray Bowman, 2023. "Who innovates during a crisis? Evidence from small businesses in the COVID-19 pandemic," Journal of Evolutionary Economics, Springer, vol. 33(3), pages 893-950, July.
    12. Pablo Andrés Neumeyer & Francisco J. Buera & Roberto N. Fattal Jaef & Hugo Hopenhayn & Yongseok Shin, 2025. "The Economic Ripple Effects of a Temporary Shutdown," Department of Economics Working Papers 2025_06, Universidad Torcuato Di Tella.
    13. Emin M. Dinlersoz & Timothy Dunne & John Haltiwanger & Veronika Penciakova, 2023. "Local Origins of Business Formation," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2023(7), pages 1-12, November.
    14. John C. Haltiwanger, 2022. "Entrepreneurship during the COVID-19 Pandemic: Evidence from the Business Formation Statistics," Entrepreneurship and Innovation Policy and the Economy, University of Chicago Press, vol. 1(1), pages 9-42.
    15. Buera, Francisco & Fattal Jaef, Roberto & Hopenhayn, Hugo & Neumeyer, Pablo Andrés & Shin, Yongseok, 2021. "The Economic Ripple Effects of COVID-19," CEPR Discussion Papers 16071, C.E.P.R. Discussion Papers.
    16. Lynda Sanderson, 2024. "Born in bad times: Economic conditions, selection and employment," Working Papers 2024/01, New Zealand Productivity Commission.
    17. Catherine Buffington & Daniel Chapman & Emin Dinlersoz & Lucia Foster & John Haltiwanger, 2021. "High-frequency data from the U.S. Census Bureau during the COVID-19 pandemic: small vs. new businesses," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(3), pages 155-167, July.

    More about this item

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • G01 - Financial Economics - - General - - - Financial Crises
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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