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Business Formation: A Tale of Two Recessions

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

Abstract

The trajectory of new business applications and transitions to employer businesses differs markedly during the Great Recession and the COVID-19 recession. Both applications and transitions to employer start-ups 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 toward 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," AEA Papers and Proceedings, American Economic Association, vol. 111, pages 253-257, May.
    • Handle: RePEc:aea:apandp:v:111:y:2021:p:253-57
    DOI: 10.1257/pandp.20211055
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    References listed on IDEAS

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    1. Kimberly Bayard & Emin M. Dinlersoz & Timothy Dunne & John Haltiwanger & Javier Miranda & John J. Stevens, 2018. "Early-Stage Business Formation : An Analysis of Applications for Employer Identification Numbers," Finance and Economics Discussion Series 2018-015, Board of Governors of the Federal Reserve System (U.S.).
    2. Steven J. Davis & John Haltiwanger, 2024. "Dynamism Diminished: The Role of Housing Markets and Credit Conditions," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(2), pages 29-61, April.
    3. Steven J. Davis & John Haltiwanger & Ronald S. Jarmin & C.J. Krizan & Javier Miranda & Alfred Nucci & Kristin Sandusky, 2009. "Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 329-366, National Bureau of Economic Research, Inc.
    4. 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.
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    Citations

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    Cited by:

    1. 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.
    2. Darmouni, Olivier & Sutherland, Andrew, 2024. "Investment when new capital is hard to find," Journal of Financial Economics, Elsevier, vol. 154(C).
    3. 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.
    4. 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.
    5. 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).
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. Lynda Sanderson, 2024. "Born in bad times: Economic conditions, selection and employment," Working Papers 2024/01, New Zealand Productivity Commission.
    11. 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).
    12. John Haltiwanger, 2022. "Entrepreneurship in the twenty-first century," Small Business Economics, Springer, vol. 58(1), pages 27-40, January.
    13. 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.

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    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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