Friday, August 8, 2014

Comment on Cowen

My comment on this post by Tyler Cowen (it never made it through moderation):

- I have been amazed at how many econ journalists and economist bloggers were not already aware of these trends. The Hathaway and Litan briefs have not revealed new facts; just pushed on them in some very helpful ways. Academics have known the basic facts (declining entrepreneurship, aging firms) for some time. The general decline in entrepreneurship was documented in a working paper that started circulating almost 3 years ago (here) and in various Kauffman briefs. Over a year ago I blogged about the aging of the firm distribution. That post had very little traffic even by this blog's standards, but I see now that it wasn't because the topic doesn't interest people.
- The Yglesias argument is just speculation. We've had a hard time finding evidence for it. The aggregate times series should make anyone skeptical. If he wants to push this story, he should use regional variation (for a start). 
- This isn't just about subsistence entrepreneurship, the "orange sellers" and mom-n-pop shops. At least starting around 2000, high-growth entrepreneurs took a hit too. 
- While it's true that the datasets on which these findings are based currently end in 2011, the establishment birth data we see in the BED (which extends through 2013q4) are suggestive (though not conclusive, since establishments aren't firms). Don't expect a massive rebound in new firm formation on the heels of the Great Recession.

The last two points are responses to other comments on the post. This is a good example of an issue on which the blogosphere (or, at least, the blogs with readers) and journalists are way behind academia, though there are a handful of journalists who have been on the case for several years.

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