PRESENTED BY RYAN DECKER (BOARD OF GOVERNORS, US FEDERAL RESERVE)
Applications for new businesses surprisingly surged during the COVID-19 pandemic, rising the most in industries rooted in pandemic-era changes to work and lifestyles. The unexpected surge in applications raised questions about whether a surge in actual new employer businesses would follow. Evidence now shows increased employer business entry with notable associated job creation; and industries and locations with the largest increase in applications have had accompanying large increases in employer business entry. We also observe a tight connection between the surge in applications and quits—or close proxies for quits—both at the national and local level. Within major cities, applications, net establishment entry, and our quits proxy each exhibit a “donut pattern,” with less growth in city centers than in the surrounding areas, and these patterns are closely related with patterns of work-from-home activity. Reallocation of jobs across firm age, firm size, industry, and geography groupings increased significantly. Relatedly, there is the beginning of a reversal of the pre-pandemic trend toward greater economic activity being concentrated at large and mature firms, but this reversal is quite modest in magnitude.
Ryan A. Decker is a principal economist at the Federal Reserve Board of Governors, where he rotates between coordinating the staff GDP forecast, following the industrial sector, and fulfilling various other responsibilities. Ryan’s academic research focuses on entrepreneurship, firm dynamics, and labor markets in both official and nontraditional data. He is also a member of the Conference on Research in Income and Wealth. Previously, Ryan worked at the U.S. Census Bureau’s Center for Economic Studies. His research has been published in the Brookings Papers on Economic Activity, the American Economic Journal: Macroeconomics, the Journal of Economic Perspectives, and the American Economic Review, among other journals. He received his PhD from the University of Maryland.
Chair: Kevin Fox, UNSW Business School and ESCoE
Discussant: Tom Wickersham, Office for National Statistics