DEVELOPING SHORT-TERM INDICATORS OF BUSINESS DYNAMICS BUSINESS BIRTHS AND DEATHS Entrepreneurship Indicators Steering Group DEVELOPING SHORT-TERM INDICATORS OF BUSINESS DYNAMICS BUSINESS BIRTHS AND DEATHS Nadim Ahmad Julia Gauch OECD Statistics Directorate June 25, 2007 Istanbul, Turkey

Overview  Background information: The OECD/ Eurostat Framework on BD  A need for real time indicators  The OECD Proposal - Labour Force Surveys - Administrative Registers  Conclusions and future steps

The OECD/Eurostat Business demography Framework  Importance of business births and deaths for policy makers and entrepreneurship  Inform evidence based entrepreneurship policy  Main purpose of the BD OECD/Eurostat Framework: Improve international comparability of business births and deaths.  However, partial picture of entrepreneurship in real time.

A need for real time indicators  Weakness of indicators based on Business registers: Data available 2 or 3 years after the reference period  Limit to measure of entrepreneurship in real time.  Need for complementary initiatives. Need to develop more timely indicators  2 OECD initiatives

The OECD Proposal: Labour Force Surveys  Source of information for the labour market  Source of information for entrepreneurship policies (stock of self-employment )  EIM and the COMPENDIA database: - Measure of business ownership. - Based on harmonised data from the OECD Labour Force Survey - 23 OECD countries.  Collaboration OECD/EIM: - Improve the quality of data -Encourage more disaggregation by sector  Source of information for business births and deaths

Key variables in the LFS  For births: Are you self-employed? How long have you worked in this status (self-employed)?  For deaths: What was your employment status before your current job (including the self-employed)? Are you unemployed? What was your previous employment (including self- employed) ?

The use of LFSs for short term business births and deaths indicators Advantages - Key advantage: Timely indicators - Possible to create dynamic variables analogous to self- employment births and deaths - Ability to link to entrepreneur characteristics Disadvantages - Unincorporated vs. incorporated self employed - Sample sizes small - Lack of harmonisation between LFSs

The OECD Proposal: Business Registers  Produce short-term indicators from Business Registers  Establish a correlation between exists and entries from administrative sources and “pure” births and deaths from the BD Framework.  Possible to create short-term proxies of birth and deaths rates

Conclusions and steps forward  Timeliness of LFS as the main advantage; disaggregated data.  Start for correlation has been established; further research is needed  Involvement of international bodies: OECD/ EIM and UNECE/ Eurostat/OECD Expert Group (2009)