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April, 2001, Vol. 124, No. 4

Timothy R. Pivetz, Michael A. Searson and  James R. Spletzer 

The relatively recent development of longitudinal establishment data sets has generated considerable excitement in both the academic and the statistical communities. The descriptive statistics coming out of these data sets illustrate the large amount of volatility at the individual establishment level that underlies the smooth time series of aggregate employment growth. This finding not only has stimulated the review and updating of existing labor market theories, but also has motivated U.S. statistical agencies to produce longitudinal job flow statistics from their administrative data sets. This article describes a new longitudinal database from the Bureau of Labor Statistics that has the potential for enhancing microdata research into topics such as job creation, job destruction, and the life cycle of establishments.

The literature on the demand for labor in general and on gross job flows in particular has flourished during the past decade. Perhaps the most important finding discussed is the tremendous heterogeneity in establishment-level employment changes that is evident in the job creation and job destruction statistics underlying net employment growth. For example, using data spanning much of the 1970s and 1980s, Steven J. Davis, John C. Haltiwanger, and Scott Schuh report that, on average, 5.5 percent of manufacturing jobs were destroyed and 5.2 percent created over a 3-month interval.¹ The –0.3-percent difference between these two statistics is the average net employment growth per quarter.