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The long-run evolution of business entry and exit rates in Canada

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  • Li Li

Abstract

Since the 1980s, the entry and exit rates of firms have declined significantly worldwide, including in Canada and the United States, signalling a reduction in business dynamism. This paper builds on a study by MacDonald (2014) by extending the analysis of Canadian entry and exit trends from 1983 to 2012 up to 2021 and comparing these results with those from the United States. While Canadian entry and exit rates previously declined more sharply than those in the United States, this decline largely ceased in the late 2010s, with rates approaching levels similar to their U.S. counterparts. The Canadian declines are not attributable to sectoral shifts but rather affect all sectors. This paper further finds that sector-specific increases in industrial concentration do not appear to explain the decline in Canadian entry and exit rates.

Suggested Citation

  • Li Li, 2025. "The long-run evolution of business entry and exit rates in Canada," Economic and Social Reports 202500900001e, Statistics Canada, Analytical Studies and Modelling Branch.
    • Handle: RePEc:stc:stcp8e:202500900001e
    DOI: https://doi.org/10.25318/36280001202500900001-eng
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    References listed on IDEAS

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    1. Pierre Fortin, 1996. "The Great Canadian Slump," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 761-787, November.
    2. Baldwin, John R. Macdonald, Ryan, 2009. "The Canadian Manufacturing Sector: Adapting to Challenges," Economic Analysis (EA) Research Paper Series 2009057e, Statistics Canada, Analytical Studies Branch.
    3. Brian C. Albrecht & Ryan A. Decker, 2024. "Rising Markups and Declining Business Dynamism: Evidence From the Industry Cross Section," FEDS Notes 2024-03-08-2, Board of Governors of the Federal Reserve System (U.S.).
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    More about this item

    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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