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

Leland Crane, Ryan A. Decker, Aaron Flaaen, Adrian Hamins-Puertolas and Christopher Kurz

Journal of Macroeconomics, 2022, vol. 72, issue C

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 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.

Keywords: Business exit; Business death; COVID-19; Big data; Non-traditional data (search for similar items in EconPapers)
JEL-codes: C55 C81 D22 E32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Business Exit During the COVID-19 Pandemic: Non-Traditional Measures in Historical Context (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:72:y:2022:i:c:s0164070422000210

DOI: 10.1016/j.jmacro.2022.103419

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