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5 Improving Data and Statistics on Business DynamicsBridging the Gap Between the Current and a Comprehensive System
Pages 92-116

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From page 92...
... expanding the scope and details of information on individuals businesses. We offer specific recommendations -- about how to improve the business lists residing at the statistical agencies as well as other data sources relevant to the measurement of business formation, dynamics, and performance -- while recognizing the need to minimize additional costs and respondent burden.
From page 93...
... • Public Purpose: Subject to confidentiality requirements, data sharing among government statistical agencies and data access by others should be facilitated when it serves a substantial public purpose. Data uses that serve a substantial public purpose include those that (1)
From page 94...
... A small percentage but large absolute number of these businesses evolve into firms with employees. Data on nonemployers, sole proprietors, and those involved in entrepreneurial activities are therefore essential for studying business dynamics.
From page 95...
... For measuring business dynamics, it would be beneficial to reduce the undersampling of those parts of the business population that are most likely to be in transition and that provide early indicators of the future directions of the economy. Recommendation 1: To measure business dynamics more effect ively, the Census Bureau and the Bureau of Labor Statistics (BLS)
From page 96...
... that provide basic measures of business dynamics, including statistics on business formation and dissolution and job creation and destruction. Some extensions of these programs would admittedly necessitate longer term commitment, while others may be initiated by more intensive use of existing data.
From page 97...
... Nascent businesses encompass the entrepreneurial activities of individuals or households before they come in contact with the legal system as business entities -- thus, business registers take one only so far in measuring business dynamics. Only after acquiring an EIN as a federal business taxpayer, or as a state Unemployment Insurance taxpayer, is a business tracked in the frames used by BLS and the Census Bureau to measure economic activity.
From page 98...
... While there are limitations to household-based data, such as the typical absence of information on business performance, they can add unique analytic capacity for understanding business dynamics. Ideally, information collected from households would be linkable to business data sets through unique identification numbers.
From page 99...
... . The primary shortcoming of the SBO, in terms of its value for producing statistics on business dynamics, is that it is carried out infrequently -- once every five years.
From page 100...
... Given finite, often tightening resources, a realistic strategy to improve business data must rely heavily on effective use of current data collection efforts. 5.2.1 Linking Survey and Administrative Data Sources A comprehensive business data system must integrate information from an array of sources -- private and public, business and household based, cross-sectional and longitudinal, survey and administrative, national and subnational -- in a way that permits business dynamics to be measured in ways that are just now being conceptualized.
From page 101...
... Looking forward, the statistical agencies should develop their administrative data and surveys with the intent to integrate them into a longitudinal household-business data infrastructure. Recommendation 6: The Census Bureau should develop a fully integrated longitudinal household-business data infrastructure from administrative data to serve as a platform for tracking business formation, for integrating household and business survey data for measuring economic activity associated with the business forma tion process, and for developing samples for new surveys of busi ness dynamics.
From page 102...
... Similarly, the Integrated Longitudinal Business Database (ILBD) combines survey and administrative data on employer and nonemployer businesses.
From page 103...
... The statistical agencies should try to take advantage of these resources. Recommendation 8: The Census Bureau and BLS should explore and actively pursue opportunities to acquire microdata sets -- on venture capital investment, business financing, and small business
From page 104...
... Statistical agencies may be able to improve the accuracy and timeliness of existing data fields as well. Given that businesses must continually update their own employment, payroll, capital expenditure, and other records, it makes sense to develop conduits that allow internal reporting systems to feed into government data collections.
From page 105...
... 5.2.2 Coordinating the Business Lists The business lists maintained by the statistical agencies serve a number of critical purposes. They are used to create sampling frames for a wide variety of surveys conducted by the Census Bureau and by other statistical agencies; for benchmarking survey data; for publishing employment and wage data; and for generating aggregates used by other agencies, most notably many of the inputs to the national income and product accounts.
From page 106...
... BLS data could benefit the Census Bureau by providing employment data for single units, and industry codes and physical location information for all records. Matching BLS's business establishment list and the Census Bureau's business register would allow editing processes to be developed to identify records with large discrepancies.
From page 107...
... A goal of the reconciliation project might be to identify the most productive data items and records to be shared under CIPSEA. To fully integrate all useful information, reconciliation should take place at or near the end of the production processes that yield the current BLS and Census Bureau business registers.
From page 108...
... Recommendation 12: The quality of research based on business data produced by the statistical agencies would improve with greater interaction between outside researchers and businesses and the statistical agencies. As recommended in previous Committee on National Statistics reports, statistical agencies, in particular the Census Bureau, should incorporate into their missions a broader interpretation of the criteria for access to data.
From page 109...
... As a specific example, one could imagine research and policy interest in data on federal government contract awards to private businesses, linked to the Census Bureau business register using EINs or other common business identifiers. The Census Bureau could use data linked in this way to produce public-release statistics on the volume and type of contract awards by county, industry, business size, and business age.
From page 110...
... can be helpful for such purposes as achieving greater efficiency in drawing samples, evaluating completeness of population coverage, and reducing duplication among statistical pro grams, as well as reducing respondent burden. -- Practice 11: Coordination and Cooperation with Other Statistical Agencies, Principles and Practices for a Federal Statistical Agency (National Research Council, 2005a, pp.
From page 111...
... To their credit, the statistical agencies have recognized the potential gains from data sharing, and survey and administrative data on U.S. businesses are shared to some extent among BEA, BLS, and the Census Bureau for statistical purposes.8 Recommendation 11, above, argues for extending CIPSEA to increase the flexibility with which information can be shared among statistical agencies for purposes of constructing a comprehensive business register and for designing special surveys.
From page 112...
... While recognizing that the "ideal" data system for measuring business dynamics would ultimately integrate data from an array of sources -- private and public, business- and household-based, cross-sectional and longitudinal, survey and administrative, national and subnational -- it is worth noting that CIPSEA will, in reality, probably expand only incrementally. A first step should be a push to amend Section 6103 of the IRS Code and Treasury regulations to allow BLS and BEA access to part or all of the tax data to which the Census Bureau has access for the specific purposes of creating a unified business list.
From page 113...
... why this requires obtaining better data, especially longitudinal information, on new and small businesses than are currently produced; (c) what an ideal data collection system for monitoring business dynamics might look like; and (d)
From page 114...
... Implementing point 2 also seems to us quite feasible. Business age variables can be constructed by linking the business registry over time; the Census Bureau's Center for Economic Studies has already done this through its construction of the Longitudinal Business Database.
From page 115...
... Other recommendations, such as those suggesting more rapid integration of new technologies or more effective use of existing data sources, are offered with the hope of encouraging long-term efficiency of business data collection. In summary, a major justification for the panel's recommendations is to avoid the costs of "benefits foregone" from the absence of timely, precise data on the mechanisms by which the U.S.
From page 116...
... By any calculus, the amount of resources required to provide a more timely, more accurate, and more complete description of U.S. business dynamics seems like a very good investment of public resources, yielding substantial benefits for future generations.


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