Cyclical Patterns of Business Entry and Exist Dynamics in the US Economy

Abstract      

This paper documents the cyclical patterns of business entry and exist dynamism in the US using the Business Dynamic statistics (BDS). The main message is that, for both firms and establishments, the entry margin is significantly procyclical while the exist margin shows little cyclicality. In addition to the entry and exist rates, the numbers and relative sizes of entrants and exits exhibit similar patterns over the business cycles. I then examine the roles of size, age, and sector in shaping the observed cyclicality, or lack thereof, and find significant variation across different groups.