The Role of Nonemployers in Business Dynamism and Aggregate Productivity / Pedro Bento, Diego Restuccia.

Format:

Book

Author/Creator:

Bento, Pedro.

Contributor:

National Bureau of Economic Research.

Restuccia, Diego.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25998.

NBER working paper series no. w25998

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

The well-documented decline in business dynamism, measured by the net entry rate of employer firms, has been proposed as an explanation for the productivity growth slowdown in the United States. We assess the role of nonemployers, firms without paid employees, in business dynamism and aggregate productivity. Including nonemployers, the total number of firms has instead increased since the early 1980s, which in the context of a standard model of firm dynamics implies an annualized growth of measured aggregate productivity of 0.22%, one-quarter of the productivity growth in the data. Further accounting for time changes in the share of nonemployer firms and in the distribution of employment across firms, we find that productivity growth is even higher (0.47% per year). The productivity growth slowdown is not due to changes in net firm entry.

Notes:

Print version record

June 2019.