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Business Dynamism in the UK: New Findings Using a Novel Dataset

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Listed:
  • Silvia Lui
  • Russell Black
  • Josefa Lavandero-Mason
  • Mohammad Shafat

Abstract

We use a novel firm-level dataset to measure employment dynamics of UK businesses from 1999 to 2019, building on microdata from the Inter-Departmental Business Register (IDBR) and administrative data on employment from PAYE records at HMRC. We construct a new quarterly dataset by using consecutive snapshots of the IDBR to deduce signs of activity of firms. We present detailed descriptive analysis showing the quarterly averages for job creation and destruction by size, sector, transition status and age. In addition, we compute the marginal effects of age and size on growth using the Davis, Halitwanger and Schuh (DHS) approach. Our results show that business dynamism has slowed down since the 2008-2009 financial crisis on two levels: firstly, a decline in job destruction and secondly, a decline in job creation due to entry. Age has an important role in UK’s business dynamism – young firms are the most dynamic group of enterprises, independently of size.

Suggested Citation

  • Silvia Lui & Russell Black & Josefa Lavandero-Mason & Mohammad Shafat, 2020. "Business Dynamism in the UK: New Findings Using a Novel Dataset," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2020-14, Economic Statistics Centre of Excellence (ESCoE).
    • Handle: RePEc:nsr:escoed:escoe-dp-2020-14
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    References listed on IDEAS

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    1. Criscuolo, Chiara & Gal, Peter N. & Menon, Carlo, 2014. "The dynamics of employment growth: new evidence from 18 countries," LSE Research Online Documents on Economics 60286, London School of Economics and Political Science, LSE Library.
    2. Teresa C Fort & John Haltiwanger & Ron S Jarmin & Javier Miranda, 2013. "How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 520-559, August.
    3. Lucia Foster & Cheryl Grim & John Haltiwanger, 2016. "Reallocation in the Great Recession: Cleansing or Not?," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 293-331.
    4. Decker, Ryan A. & Haltiwanger, John & Jarmin, Ron S. & Miranda, Javier, 2016. "Where has all the skewness gone? The decline in high-growth (young) firms in the U.S," European Economic Review, Elsevier, vol. 86(C), pages 4-23.
    5. 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.
    6. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 819-863.
    7. 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.
    8. Barnett, Alina & Chiu, Adrian & Franklin, Jeremy & Sebastia-Barriel, Maria, 2014. "The productivity puzzle: a firm-level investigation into employment behaviour and resource allocation over the crisis," Bank of England working papers 495, Bank of England.
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    Cited by:

    1. Goldin, Ian & Koutroumpis, Pantelis & Lafond, François & Winkler, Julian, 2020. "Why is productivity slowing down?," MPRA Paper 99172, University Library of Munich, Germany.

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    More about this item

    Keywords

    business dynamism; employment; administrative data;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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