E: m.anyadike-danes@aston.ac.ukW: enterpriseresearch.ac.uk

BSD User's Group WorkshopAston Business SchoolApril 29 2014

overview

• building the longitudinal firm-level database (LFLD)

• business demography: the big picture

• application (1): what do policymakers need to know aboutbusiness demography?

• application (2): matching the UK Innovation Survey(UKIS)/Community Innovation Survey (CIS) to the LFLD

• drowning in data? building a longitudinal database from theBSD local unit datasets

building the longitudinalfirm-level database

sources & building

1. sourcesI Inter-Departmental Business Register

(IDBR) is a ’live’ register updated for jobsfrom HMRC (VAT and PAYE) and Business RegisterEmployment Survey

I the BSD comprises extracts from ’snapshots’ of the IDBRtaken each March (1997 to 2013): no marker datingmeasurements

2. building the longitudinal databaseI focus on firm and job dynamics with firms linked year-to-year

by IDI appearance of first job ≡ birth of firmI dis-appearance of last job ≡ death of firm (secondary:

’active’/’inactive’ flag also used)I no firm can be re-born (with same ID)I assumptions of convenience: SIC at birth; location at birth

(latter currently under revision)

business demography: thebig picture

Figure 1: UK private sector firms,1997-2013, by birth cohort ’000

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coh13coh12coh11coh10coh09coh08coh07coh06coh05coh04coh03coh02coh01coh00coh99coh98coh97

Figure 2: Jobs, UK private sector firms,1997-2013, by birth cohort ’000

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coh13coh12coh11coh10coh09coh08coh07coh06coh05coh04coh03coh02coh01coh00coh99coh98coh97

Figure 3: Jobs, UK private sector firms,1997-2013, by birth cohort ’000,shifted origin

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coh13coh12coh11coh10coh09coh08coh07coh06coh05coh04coh03coh02coh01coh00coh99coh98coh97

Figure 4: UK private sector firms,hazard of death by years since birth,by birth cohort, rate

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coh98coh99coh00coh01coh02coh03coh04coh05coh06coh07coh08coh09coh10coh11coh12

Figure 5: UK private sector firms,jobs per firm years since birth,by birth cohort, 2013 survivors, ratio

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/firm

coh98coh99coh00coh01coh02coh03coh04coh05coh06coh07coh08coh09coh10coh11coh12coh13

Figure 6: UK private sector firms,jobs per firm, single workplace firmsby years since birth, by birth cohort,2013 survivors, ratio

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/firm

coh98coh99coh00coh01coh02coh03coh04coh05coh06coh07coh08coh09coh10coh11coh12coh13

Figure 7: UK private sector firms,single workplace firms, share of firmsand jobs, 1997-2013%

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application (1): what dopolicymakers need to knowabout businessdemography?

5 brutal facts

• every year a large number private sector firms are born in theUK ∼ typically between 200,000 and 250,000

• most new born firms are very small ∼ around 90% have lessthan 5 employees

• a decade later between 70% and 80% of those new born firmswill be dead

• of those which have survived to age 10 ∼ around 75% ofthose born with less than 5 employees will still have less thanfive employees

• the firms are born with about 1 million jobs ∼ a decade laterthe survivors employ just half a million

putting the facts together

• a simple framework can be used to put these facts togetherand it leads us to some (possibly) encouraging facts about jobgrowth

• we start with a table which tracks firms by size at birth frombirth to a date – here 10 years into the future

• this is called an origin/destination table: the rows are origins– the size-band at birth; the destinations are size-bands 10years later

• data here is an average of four successive birth cohorts, firmsborn in four successive years: 1998, 1999, 2000, 2001

Table A: origin destination table,UK firms, birth to age10, ’000

destination (age 10) size-band1-4 5-9 10-19 20+ dead all

origin 1-4 36.0 6.1 2.3 1.3 145.1 190.8(birth) 5-9 1.8 1.4 0.8 0.5 11.4 15.9

size 10-19 0.4 0.3 0.4 0.4 3.9 5.5band 20+ 0.2 0.1 0.1 0.7 2.6 3.7

all 38.4 7.9 3.6 3.0 163.1 216.0

Note: average of birth cohorts 1998 to 2001

Table B: origin destination tableUK jobs by size-band, birth, ’000

destination (age 10) size-band1-4 5-9 10-19 20+ dead all

origin 1-4 54.1 11.5 4.5 2.6 218.9 291.4(birth) 5-9 11.3 8.8 5.2 3.7 73.1 102.1

size 10-19 5.8 4.1 5.9 6.2 52.4 74.3band 20+ 13.8 6.2 7.0 145.0 334.7 506.7

all 84.9 30.6 22.6 157.4 678.9 974.5

Note: average of birth cohorts 1998 to 2001

Table C: origin destination tableUK jobs by size-band, age 10, ’000

destination (age 10) size-band1-4 5-9 10-19 20+ all

origin 1-4 47.2 33.3 28.7 80.2 189.5(birth) 5-9 3.0 7.1 9.4 29.8 49.3

size 10-19 0.7 1.8 5.5 28.9 36.9band 20+ 0.2 0.5 1.8 183.5 186.0

all 51.2 42.7 45.5 322.4 461.8

Note: average of birth cohorts 1998 to 2001

Table D: origin destination tableUK jobs by size-bandage 10 survivors, changebirth to age10, ’000

destination (age 10) size-band1-4 5-9 10-19 20+ all

origin 1-4 9.7 23.6 24.4 77.8 135.5(birth) 5-9 -4.5 0.4 4.8 26.6 27.3

size 10-19 -3.4 -1.5 0.4 23.2 18.6band 20+ -7.2 -3.8 -4.3 43.7 28.4

all –5.4 18.6 25.3 171.4 209.9

Note: average of birth cohorts 1998 to 2001

two (possibly) encouraging facts

• a very small proportion ∼ less than 1% ∼ of the smallest (1 to4 job) firms survive and make the transition to 20+ employees

• but this 1% make a very large contribution to job growth ∼accounting for around one third of all (net) jobs added bysurvivors

application (2): matchingthe UK Innovation Survey(UKIS)/CommunityInnovation Survey (CIS) tothe LFLD

what we have learned about the UKISfrom matching: qualitative

• the ’businesses’ which respond to the UKIS are ”reportingunits” (RUs) – this is an IDBR-defined category – for singleworkplace firms RUs are just firms, but for multi-workplacefirms RUs are ’groupings’ of workplaces

• more than one RU of a multi-workplace firm may be in thesampling frame

• the RUs in the sampling frame (stratified by size-band andsector) must have responded in at least one ONS R&D surveythat they undertook some R&D activity (but may notnecessarily be active at CIS survey period)

• the ’grossed up’ population figures published in BIS reports onthe UKIS are also RUs – no attempt is made to convert RUsinto numbers of firms

what we have learned about the UKISfrom matching: quantitative (1)duplicate firm IDs, waves of CIS,numbers

CIS year responses firms firmswave all unique non swp mwp

unique

2 1997 2342 2291 2250 41 1227 10233 2001 8172 8075 8018 57 5536 24824 2005 16445 16113 15938 175 10589 53495 2007 14872 14591 14421 170 9681 47406 2009 14281 13994 13846 148 8997 48497∗ 2011 13770 13556 13478 108 8767 4711

∗The data file had no firm ID, 572 respondents could not be matched

what we have learned about the UKISfrom matching: quantitative (2)consistency of employees & turnoverbetween CIS and LFLD, single workplace firms,count of exact record matches

CIS year unique swp employees turnoverwave firms firms

2 1997 2250 1227 187 1273 2001 8018 5251 441 1034 2005 15938 10584 870 1045 2007 14421 9558 1142 6456 2009 13846 8997 701 927 2011 13478 8767 408 37

drowning in data? buildinga longitudinal databasefrom the BSD local unitdatasets

why are we interested inlongitudinal workplace-level data?

• in firm-level data jobs are ’located’ at the firm’s HQ, sospatial analysis of workplace-level data to investigate,

I job location and re-locationI job creation and destruction

• workplace-level data permits a more fine-grained descriptionof firm-level job growth,

I ’organic growth’– expansion of an existing workplace or thefounding of a new workplace

I ’growth by acquistion’ of an existing workplace from anotherfirm

I ’death due to disposal’ – where the firm disappears asworkplaces are sold

I firm death where all workplaces die

algorithm for buildingthe longitudinal workplace-leveldatabase (1)

• starting with a birth cohort from the LFLD use the live lumarker to separate firms which are only ever single workplace(sws) firms

• call the rest multi-workplace (mwp) firms – though they arenot always so – this is the entref list

• database is built birth cohort by cohort: the 1998 birth cohortcomprised 239,000 firms, about 2,000 firms were mwps

• match the BSD LU to the entref list year-by-year from 1998onwards – this yields the luref list: all the workplaces everassociated with the mwp firms – the ’workplace history’ ofeach mwp firm

• this list is about 16,000 records, since there are on averageeight workplaces per mwp

algorithm for buildingthe longitudinal workplace-leveldatabase (2)

• check for consistency between the live lu series from LFLDand the frequency count from the workplace history

• to determine the ’firm history’ of each workplace – we mergethe LFLD year-by-year into the ’luref list’

• we use year-to-year comparison of the firm history of eachworkplace to determine whether it,

I was born to the firm on the ’entref list’I remains alive and is owned by the same firm (continuing)I is acquired from another firm – distinguishing firms on the

entref list from those in some other cohortI is disposed of to another firm – distinguishing firms on the

entref list from those in some other cohortI dies

algorithm: problems

• major discontinuity in 2003: missing around 90,000 records

• luref changes, but the same entref

• inconsistency between live lu in the LFLD and the number oflurefs in the workplace-level BSD

algorithm: solutions

• 2003 discontinuity: imputation

I if luref and entref unchanged 2002 –> 2004 and death code2004 == 0 (ie still alive), then set 2003 equal to 2002(employees average of 2002 and 2004?)

I conservative solution: any luref changing entref will be dropped

• luref changes: if luref changes from equal to entref to distinctluref with entref unchanged match postcodes? conservativesolution: any luref changing entref will be dropped

• many live lu entries missing from early years of BSD, but scaleof problem as yet unknown

The statistical data used here is from the Office of NationalStatistics (ONS) and is Crown copyright and reproduced with thepermission of the controller of HMSO and Queens Printer forScotland.The use of the ONS statistical data in this work does notimply the endorsement of the ONS in relation to the interpretationor analysis of the statistical data.

coh98 survivors to age 10,firms and jobs by workplace histories

counts firms jobs98 jobs08 jf98 jf08 growth

s always 39162 127192 233457 3.25 5.96 1.834ms simple 52 5472 2814 105.23 54.12 0.514

m always 89 40266 45683 452.43 513.29 1.135sm simple 1033 32895 146019 31.84 141.35 4.439

complex 500 17751 32321 35.50 64.64 1.821

all 40836 223576 460294 5.47 11.27 2.060

shares (%) firms jobs98 jobs08

s always 95.9 56.9 50.7ms simple 0.1 2.4 0.6

m always 0.2 18.0 9.9sm simple 2.5 14.7 31.7

complex 1.2 7.9 7.0

cohort98, survivors to 2008,job creation and destruction accounts,firms and jobs by swp/mwp status,cumulated 1998 to 2008, ’000 (1)

(a) allalways s simple sm other all

opening 127.2 32.9 63.5 223.6

ownch 106.3 55.0 20.5 181.8

net trans 58.1 -3.2 54.9

transinflow 58.1 -3.2 54.9transinstock 64.4 80.4 144.0transout -64.4 -80.4 -144.0

closing 233.5 146.0 80.8 460.3

cohort98, survivors to 2008,job creation and destruction accounts,firms and jobs by swp/mwp status,cumulated 1998 to 2008, ’000 (2)

(b) swp

always s simple sm other all

opening 127.2 32.9 15.4 175.5

ownch 106.3 31.5 11.6 149.4

net trans -64.4 -4.1 -68.4

transinflow 0.0 -19.5 -19.5transinstock 0.0 47.5 47.5transout -64.4 -32.1 -96.5

closing 233.5 0.0 23.0 256.5

cohort98, survivors to 2008,job creation and destruction accounts,firms and jobs by swp/mwp status,cumulated 1998 to 2008, ’000 (3)

(c)mwp

always s simple sm other all

opening 0.0 48.1 48.1

ownch 23.5 8.9 32.4

net trans 122.5 1.0 123.5

transinflow 58.1 16.4 74.5transinstock 64.4 32.1 96.5transout 0.0 -47.5 -47.5

closing 146.0 57.8 203.8