Understanding Business Dynamics An Integrated Data System for America's Future (2007) / Chapter Skim
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Executive Summary
Executive Summary
Pages 1-12
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Even the physical location of business activity has become more difficult to track, as information technology permits key inputs for some industries to electronically connect into the production process from anywhere in the world. The blurring of boundaries implies that measuring business activity increasingly requires tracking the connection between employers, employees, and independent entities.
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identify gaps in data sources that impede the production of accurate and timely statistics and that hamper research on business dynamics; and (3) develop recommendations for more effective integration of data sources and for new and improved collection of business data, recognizing legal impediments, survey response rate and burden considerations, and access and confidentiality issues.
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2. 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.
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These recommendations reflect the need to improve business data while recognizing that statistical agency budgets are tight and that containment of respondent burden is essential. The third set of recommendations is directed toward shifting the legal and organizational environment to accommodate data sharing and confidentiality protections in such a way that enables the kinds of efficiencies envisioned by the panel to occur.
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Readily avail able business age indicators in these administrative records systems include the application date for an Employer Identification Num ber, the point at which positive revenues are generated, and the first period with positive payroll. A focus on publishing statistics by business age would also be compatible with the recent innovations in measuring producer dynamics, such as those developed in association with the Business Employment Dynamics (BED)
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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 activ ity associated with the business formation process, and for devel oping samples for new surveys of business dynamics. The integra tion should include the master household address files, the job frame from linked employer-employee administrative records, and
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will continue to enhance these kinds of opportunities to improve the timeliness and accuracy of collection efforts. Improving the Business Lists Through Interagency Data Sharing Four business registers in the United States provide wide-scale coverage of both publicly and privately held businesses: three are maintained by government agencies (the Internal Revenue Service (IRS)
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They are used to create sampling frames for a wide variety of surveys conducted by the agencies; to benchmark survey data; to publish employment and wage data; and to generate key statistical aggregates, most notably many of the inputs to the national income and product accounts. Comparison projects conducted cooperatively between the Census Bureau and BLS indicate that the business lists do not consistently align -- for example, in terms of employment and establishment counts assigned to certain industries, or in their ability to pick up small and new businesses.
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Data on all sole proprietors and partnerships must also be included, whether they have employees or not. We believe that a compelling data-driven case has been made, in this report and elsewhere, that reconciliation of the business lists would better serve downstream users -- such as BEA in the production of national accounts, the Federal Reserve in carrying out research to inform monetary policy, and the Congressional Budget Office in projecting real gross domestic product growth -- to an extent that more than warrants the actions recommended here.
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The panel commends recent steps taken by the Census Bureau and IRS to emphasize the importance to public and private decision making of research that takes place at the agency's data centers, and to work out procedures to facilitate streamlined processes for reviewing proposed research projects. In planning a data system capable of measuring business formation and dynamics, it is essential to keep in mind the needs of users -- federal agencies and researchers, as well as businesses themselves.
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From page 11... ...
These recommendations are equally if not more important for measuring business dynamics, but the pace at which they can be implemented will be slower. Other recommendations, such as those suggesting more rapid integration of new technologies or more effective use of existing data sources, are offered to encourage long-term efficiency of business data collection.
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