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American Economic Review Vol. 106 No. 5 2016

Declining Business Dynamism: What We Know and the Way Forward

Ryan A. Decker1; John Haltiwanger2; Ron S. Jarmin3; Javier Miranda4

1 Federal Reserve Board, 20th Street and C Street NW, Washington, DC 20551 (e-mail: ) · 2 Department of Economics, University of Maryland, College Park, MD 20742 (e-mail: ) · 3 US Census Bureau, 4600 Silver Hill Road, Washington, DC 20233 (e-mail: ) · 4 Center for Economic Studies, US Census Bureau, 4600 Silver Hill Road, Washington, DC 20233 (e-mail: )

Abstract

A growing body of evidence indicates that the U.S. economy has become less dynamic in recent years. This trend is evident in declining rates of gross job and worker flows as well as declining rates of entrepreneurship and young firm activity, and the trend is pervasive across industries, regions, and firm size classes. We describe the evidence on these changes in the U.S. economy by reviewing existing research. We then describe new empirical facts about the relationship between establishment-level productivity and employment growth, framing our results in terms of canonical models of firm dynamics and suggesting empirically testable potential explanations.

DOI
10.1257/aer.p20161050
Volume
106
Issue
5
Pages
203-207
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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