The Promise and Potential of Linked Employer-Employee Data for Entrepreneurship Research

Abstract

In this paper, we highlight the potential for linked employer-employee data to be used in entrepreneurship research, describing new data on business start-ups, their founders and early employees, and providing examples of how they can be used in entrepreneurship research. Linked employer-employee data provides a unique perspective on new business creation by combining information on the business, workforce, and individual. By combining data on both workers and firms, linked data can investigate many questions that owner-level or firm-level data cannot easily answer alone -such as composition of the workforce at start-ups and their role in explaining business dynamics, the flow of workers across new and established firms, and the employment paths of the business owners themselves.

Enhancing Rigor in Quantitative Entrepreneurship Research

“…Entrepreneurship scholars frequently use archival data to test their hypotheses. Examples of archival data include data recorded in official government registers (e.g., linked employer-employee data or tax filings; e.g., Goetz et al, 2015), industry association records (e.g., data on venture capital investments or entry and exit of firms), commercial databases (e.g., data on companies and their patents, venture capital (VC) investments, initial public offerings (IPOs), and mergers and acquisitions (M&As) (e.g., Dalle et al, 2017), as well as various scholarly data collection initiatives, such as the Panel Study of Entrepreneurial Dynamics (PSED; Reynolds, 2007), the Global Entrepreneurship Monitor (GEM; Levie et al, 2014; Reynolds et al, 2005), the Kauffman Firm Survey (KFS; Farhat et al, 2018; Farhat & Robb, 2018), and others (e.g., Brown et al, 2017). Compared to primary data, archival data have several potential advantages, including the ability to quickly and unobtrusively collect a large number of repeated measures across different levels of analysis, allowing scholars to draw better causal inferences and employ multilevel research methods (Wennberg, 2005).…”

Pay, Employment, and Dynamics of Young Firms

“…Second, selection of highly paid workers into young firms is a strong predictor of future business success, although the direction of causality remains an open question. Third, more extensive data infrastructure along the lines of Davis et al (2007) and Goetz et al (2015) is needed and new theories of joint worker and firm dynamics with two-sided heterogeneity should be developed in order to further our understanding of important labor market outcomes. 3, column 4.…”

Firm age and job creation in the US

“…The QWI provides quarterly measures of job creation, job destruction, hires, separations, and earnings by detailed worker and firm characteristics including firm age and firm size [6]. One helpful feature of the QWI is that it provides information on the demographic composition of the workforce of young and old firms.…”

“…The Job-to-Job Flows (J2J) data product is available starting in 2001; it provides information on employer-to-employer transitions, as well as transitions into and out of non-employment, by detailed worker and firm characteristics [6]. J2J provides rich detail on employment transitions and worker reallocation across employers.…”