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JOLTS as a timely source of data by establishment size, 1990�10
Alan B. Krueger and Sarah Charnes
Alan B. Krueger is the Bendheim Professor of Economics and Public Policy at Princeton University. Sarah Charnes is an economist at the U.S. Department of the Treasury. E-mail: akrueger@princeton.edu or sarah.charnes@treasury.gov.
Following the financial crisis of 2008, unofficial tabulations of Job Openings and Labor Turnover Survey (JOLTS) data were the most timely government source of information on employment trends by establishment size; this article discusses how JOLTS data can be used to shed light on employment patterns among small businesses and also evaluates the accuracy of the JOLTS data on small establishments
Economic downturns following financial crises tend to be more severe and last longer than other downturns. 1 One possible reason for this tendency is that small businesses, whose economic activity tends to be highly procyclical (meaning that it tends to move strongly with the overall business cycle), are disproportionately harmed by financial crises because they are more dependent on bank financing than large businesses are, and bank credit tends to be constrained following financial crises. Unlike large companies, small businesses do not have access to corporate debt markets. Small business' spending is constrained by their balance sheets, which means that small businesses cannot invest as much during a credit crunch, regardless of the underlying fundamentals. 2 In addition, small businesses rely on relationship lending, particularly from small banks, and relationships are destroyed when banks close. 3
1 See, for example, Carmen M. Reinhart and Kenneth S. Rogoff, This Time is Different: Eight Centuries of Financial Folly (Princeton, NJ, Princeton University Press, 2009).
2 See Mark Gertler and Simon Gilchrist, "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," Quarterly Journal of Economics, May 1994, pp. 309�.
3 Allen N. Berger, Nathan H. Miller, Mitchell A. Petersen, Raghuram G. Rajan, and Jeremy C. Stein, "Does function follow organizational form? Lending practices of large and small banks," Journal of Financial Economics, spring 2005, pp. 237�.
Job Openings and Labor Turnover Survey
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