Declining Business Dynamism: What We Know and the Way Forward

Ryan A. Decker, John Haltiwanger, Ron S. Jarmin, Javier Miranda , American Economic Review Papers & Proceedings 106(5) , 203-207 , May 2016.

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.

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