Business Exit During the COVID-19 Pandemic: Non-Traditional Measures in Historical Context

Leland Crane, Ryan Decker, Aaron Flaaen, Adrian Hamins-Puertolas and Christopher J. Kurz
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Christopher J. Kurz: https://www.federalreserve.gov/econres/christopher-j-kurz.htm

No 2020-089r1, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Lags in official data releases have forced economists and policymakers to leverage "alternative" or "non-traditional" data to measure business exit resulting from the COVID- 19 pandemic. We first review official data on business exit in recent decades to place the alternative measures of exit within historical context. For the U.S., business exit is countercyclical and fairly common, with about 7.5 percent of firms exiting annually in recent years. Both the high level and the cyclicality of exit are driven by very small firms and establishments. We then explore a range of alternative measures of business exit, including novel measures based on paycheck issuance and phone-tracking data, which indicate exit was elevated in certain sectors during the first year of the pandemic. The evidence is mixed, however; many industries have likely seen lower-than-usual exit rates, and exiting businesses do not appear to represent a large share of U.S. employment. Actual exit is likely to have been lower than widespread expectations from early in the pandemic. Moreover, businesses have recently exhibited notable optimism about their survival prospects.

JEL-codes: C55 C81 D22 E32 (search for similar items in EconPapers)
Pages: 59 p.
Date: 2020-10-22, Revised 2021-04-15
New Economics Papers: this item is included in nep-bec, nep-ent and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Business exit during the COVID-19 pandemic: Non-traditional measures in historical context (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2020-89

DOI: 10.17016/FEDS.2020.089r1

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