Business exit during the COVID-19 pandemic: Non-traditional measures in historical context

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...

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Bibliographic Details
Published in:Journal of macroeconomics 2022-06, Vol.72, p.103419-103419, Article 103419
Main Authors: Crane, Leland D., Decker, Ryan A., Flaaen, Aaron, Hamins-Puertolas, Adrian, Kurz, Christopher
Format: Article
Language:English
Subjects:
Big data
Business death
Business exit
COVID-19
Non-traditional data
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Summary: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 fairly common, with about 7.5 percent of firms exiting annually in recent years. The high level of exit is 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. That said, we find 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. As a result, exit appears lower than widespread expectations from early in the pandemic.
ISSN:0164-0704
1873-152X
0164-0704
DOI:10.1016/j.jmacro.2022.103419