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Business Income Dynamics and Labor Market Fluidity

Henry Hyatt
Henry Hyatt
, 
Seth Murray
Seth Murray
 oraz 
L. Kristin Sandusky
L. Kristin Sandusky
   | 18 paź 2021
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Data publikacji: 18 paź 2021
Zakres stron: -
Przyjęty: 26 kwi 2021
DOI: https://doi.org/10.2478/izajole-2021-0004
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© 2021 Henry Hyatt et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.

Figure 1

Shares of the population with income in a calendar year, by income source.Notes: A: CPS-DER W-2 and Schedule SE. B: Universe W-2 and Schedules C and K-1. Authors’ calculations of the CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. Schedule C covers sole proprietors, and K1 covers partnership and S corporation income. Wage and salary income comes from W-2 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Shares of the population with income in a calendar year, by income source.Notes: A: CPS-DER W-2 and Schedule SE. B: Universe W-2 and Schedules C and K-1. Authors’ calculations of the CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. Schedule C covers sole proprietors, and K1 covers partnership and S corporation income. Wage and salary income comes from W-2 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure 2

Hire and separation rates vs. BI entry and exit rates.Notes: A: CPS-DER W-2 and Schedule C. B: Universe W-2 and Schedules C and K-1. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. Entry indicates zero BI in the previous year and positive BI in the current year. Exit indicates positive BI in the current year but zero BI in the subsequent year. Denominators for each rate are the average of total number of owners of the given entity type at the beginning and end of the year. BI, business income; CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Hire and separation rates vs. BI entry and exit rates.Notes: A: CPS-DER W-2 and Schedule C. B: Universe W-2 and Schedules C and K-1. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. Entry indicates zero BI in the previous year and positive BI in the current year. Exit indicates positive BI in the current year but zero BI in the subsequent year. Denominators for each rate are the average of total number of owners of the given entity type at the beginning and end of the year. BI, business income; CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure 3

Hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure 4

Employer-to-employer and nonemployment transitions.Notes: A: Employer-to-employer. B: Employment-to-nonemployment. C: Nonemployment-to-employment. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Employer-to-employer and nonemployment transitions.Notes: A: Employer-to-employer. B: Employment-to-nonemployment. C: Nonemployment-to-employment. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure 5

Secondary and short-duration job hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 and Schedule SE records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Secondary and short-duration job hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 and Schedule SE records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure 6

Regression point estimates over time.Notes: Authors’ calculations of CPS-DER W-2 and Schedule SE records. Plots show point estimates from a regression with the number of wage and salary jobs worked in a given year. Specifically, the year interactions for primary and secondary income from self-employment in a given calendar year. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Regression point estimates over time.Notes: Authors’ calculations of CPS-DER W-2 and Schedule SE records. Plots show point estimates from a regression with the number of wage and salary jobs worked in a given year. Specifically, the year interactions for primary and secondary income from self-employment in a given calendar year. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure B1

Total number of administrative records self-employed (millions).Notes: CPS-DER numbers from 1996–2010 are from Figure 1 of Abraham et al. (2018). Other totals are authors’ calculations on CPS-DER Schedule SE records, as well as universe-level Schedule C and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Total number of administrative records self-employed (millions).Notes: CPS-DER numbers from 1996–2010 are from Figure 1 of Abraham et al. (2018). Other totals are authors’ calculations on CPS-DER Schedule SE records, as well as universe-level Schedule C and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure D1

Schedule SE share of total consecutive-year employment.Notes: Authors’ calculations of CPS-DER W-2 and Schedule SE records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Schedule SE share of total consecutive-year employment.Notes: Authors’ calculations of CPS-DER W-2 and Schedule SE records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure E1

Hire and separation rates: wage and salary (W-2) employment.Notes: Authors’ calculations of CPS-DER W-2 records, as well as universe-level W-2 records. The denominator for all rates is the average of employment at the beginning and end of the year. CPS-DER, Current Population Survey-Detailed Earnings Record.
Hire and separation rates: wage and salary (W-2) employment.Notes: Authors’ calculations of CPS-DER W-2 records, as well as universe-level W-2 records. The denominator for all rates is the average of employment at the beginning and end of the year. CPS-DER, Current Population Survey-Detailed Earnings Record.

Figure E2

Annual hire and separation rates.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 records, universe-level W-2 data, and published aggregates. The denominator for the W-2 rates is the average of employment at the beginning and end of the year. JOLTS, QWI, and CPS Gross Flows and Employer-to-Employer Transitions series sum rates within a calendar year. CPS-DER, Current Population Survey-Detailed Earnings Record; JOLTS, Job Openings and Labor Turnover Survey; QWI, Quarterly Workforce Indicators.
Annual hire and separation rates.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 records, universe-level W-2 data, and published aggregates. The denominator for the W-2 rates is the average of employment at the beginning and end of the year. JOLTS, QWI, and CPS Gross Flows and Employer-to-Employer Transitions series sum rates within a calendar year. CPS-DER, Current Population Survey-Detailed Earnings Record; JOLTS, Job Openings and Labor Turnover Survey; QWI, Quarterly Workforce Indicators.

Figure E3

Employer-to-employer and nonemployment transitions.Notes: A: CPS-DER W-2. B: CPS-DER W-2. Authors’ calculations of CPS-DER W-2 records, as well as universe-level W-2 records. The denominator for all rates is the average of dominant employment at the beginning and end of the year. CPS-DER, Current Population Survey-Detailed Earnings Record.
Employer-to-employer and nonemployment transitions.Notes: A: CPS-DER W-2. B: CPS-DER W-2. Authors’ calculations of CPS-DER W-2 records, as well as universe-level W-2 records. The denominator for all rates is the average of dominant employment at the beginning and end of the year. CPS-DER, Current Population Survey-Detailed Earnings Record.

Figure E4

Annual transition rates.Notes: A: Employer-to-employer. B: Employment-to-nonemployment. C: Nonemployment-to-employment. Authors’ calculations of CPS-DER W-2 records, as universe-level W-2 records, and published aggregates. The denominator for the W-2 based rates is the average of employment at the beginning and end of the year. JOLTS, QWI, and CPS Gross Flows and Employer-to-Employer Transitions series sum rates within a calendar year. CPS-DER, Current Population Survey-Detailed Earnings Record; JOLTS, Job Openings and Labor Turnover Survey; QWI, Quarterly Workforce Indicators.
Annual transition rates.Notes: A: Employer-to-employer. B: Employment-to-nonemployment. C: Nonemployment-to-employment. Authors’ calculations of CPS-DER W-2 records, as universe-level W-2 records, and published aggregates. The denominator for the W-2 based rates is the average of employment at the beginning and end of the year. JOLTS, QWI, and CPS Gross Flows and Employer-to-Employer Transitions series sum rates within a calendar year. CPS-DER, Current Population Survey-Detailed Earnings Record; JOLTS, Job Openings and Labor Turnover Survey; QWI, Quarterly Workforce Indicators.

Figure E5

CPS-ASEC Multiple non-overlapping employers question vs. administrative records.Notes: Authors’ calculations of hires and separations using CPS-ASEC respondents who report multiple non-overlapping jobs in the prior year, as well as CPS-DER W-2 records. For the CPS-ASEC responses, the denominator is those who were in scope of the multiple non-overlapping employers question. For the employer-to-employer transition rate derived from administrative records, the denominator is the average of employment at the beginning and end of the year. CPS-DER, Current Population Survey-Detailed Earnings Record; CPS-ASEC, Annual Social and Economic Supplement.
CPS-ASEC Multiple non-overlapping employers question vs. administrative records.Notes: Authors’ calculations of hires and separations using CPS-ASEC respondents who report multiple non-overlapping jobs in the prior year, as well as CPS-DER W-2 records. For the CPS-ASEC responses, the denominator is those who were in scope of the multiple non-overlapping employers question. For the employer-to-employer transition rate derived from administrative records, the denominator is the average of employment at the beginning and end of the year. CPS-DER, Current Population Survey-Detailed Earnings Record; CPS-ASEC, Annual Social and Economic Supplement.

Figure F1

Hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure F2

Employer-to-employer and nonemployment transitions.Notes: A: Employer-to-employer. B: Employment-to-nonemployment. C: Nonemployment-to-employment. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.
Employer-to-employer and nonemployment transitions.Notes: A: Employer-to-employer. B: Employment-to-nonemployment. C: Nonemployment-to-employment. Authors’ calculations of CPS-DER W-2 and Schedule SE records, as well as universe-level W-2, Schedule C, and Schedule K1 records. CPS-DER, Current Population Survey-Detailed Earnings Record; SE, Self-Employment Tax.

Figure F3

Secondary and short-duration job hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of universe-level W-2, Schedule C, and Schedule K1 records.
Secondary and short-duration job hires and separations.Notes: A: Hires. B: Separations. Authors’ calculations of universe-level W-2, Schedule C, and Schedule K1 records.

Number of industries worked regressed on BI

Total industries
Intercept 1.258*** (0.000) 1.258*** (0.000)
BI 0.444*** (0.001) 0.431*** (0.001) 0.384*** (0.001) 0.392*** (0.002)
BI*BI dom 0.163*** (0.002) 0.116*** (0.002)
Worker fixed effects N Y N Y
R2 0.053 0.406 0.055 0.407

Regression of total number of jobs (including BI) on BI

CPS-DER Universe CPS-DER Universe
Intercept 1.495*** (0.000) 1.490*** (0.001)
BI 0.117*** (0.001) 0.567*** (0.001) 0.404*** (0.001) 0.748*** (0.001)
Worker fixed effects N N Y Y
R2 0.003 0.026 0.323 0.757

Number of wage and salary jobs worked regressed on BI

CPS-DER Universe
Intercept 1.420*** (0.000) 1.409*** (0.000)
Ever BI 0.074*** (0.000) 0.081*** (0.001)
Ever BI* BI −0.143*** (0.001) −0.101*** (0.001) −0.088*** (0.001) 0.013*** (0.001)
Ever BI* BI*BI dom −1.002*** (0.001) −0.818*** (0.001) −1.010*** (0.002) −0.817*** (0.001)
Worker fixed effects N Y N Y
R2 0.096 0.446 0.151 0.652

Measured decline in reallocation (percentage points) including vs. including self-employed: 1994 vs. 2014

Reallocation Measure Decline in W-2 Decline in W-2 & Schedule SE Difference Percent offset (%)
Hires 15.7 14.4 1.3 8.3
Separations 16.1 14.7 1.4 8.7
Employer-to-employer 0.7 0.6 0.2 23.8
Employment-to-nonemployment 1.8 1.7 0.1 4.1
Nonemployment-to-employment 1.3 1.1 0.2 15.6
Secondary/short-duration hires 13.9 12.8 1.1 7.4
Secondary/short-duration separations. 13.8 12.6 1.2 8.9

Administrative records data on U.S. wage and salary and BI

Legal designation Tax Form/Info. Return Files Schedule SE? Survey-based data Universe data
Employee W-2 Wage and Salary Statement N/A Social Security Administration MEF, DER extract, 1991–2015 W-2 Records 2005–2015
Sole proprietorship 1040 Schedule C Profit or Loss from Business If total self-employment income >$400 Social Security Administration MEF, DER extract, 1991–2015 Census nonemployer and employer Business Registers 2007–2015
Partnership Schedule K1: Partner's Share of Income, Deductions, Credits, etc. If total self-employment income >$400 Social Security Administration MEF, DER extract, 1991–2015 Schedule K1 filings 2007–2015
S corporation Schedule K1: Partner's Share of Income, Deductions, Credits, etc. No N/A Schedule K1 filings 2007–2015
C corporation Outside the scope of our analysis No N/A N/A

Regression of total number of jobs worked on BI, by dominant earnings

CPS-DER Universe CPS-DER Universe
Intercept 1.456*** (0.000) 1.409*** (0.000)
Ever BI 0.077*** (0.001) 0.081*** (0.001)
Ever BI * BI 0.829*** (0.001) 1.251*** (0.001) 0.899*** (0.002) 1.805*** (0.002)
Ever BI * BI * BI dom −1.002*** (0.001) −1.080*** (0.001) −0.818*** (0.002) −0.841*** (0.002)
Worker fixed effects N N Y Y
R2 0.028 0.074 0.351 0.768

Regression of number of wage and salary jobs worked on BI Intercept from any wage and salary employer in the year.

CPS-DER Universe CPS-DER Universe
Intercept 1.495*** (0.000) 1.490*** (0.001)
BI −0.883*** (0.001) −0.757*** (0.002) −0.596*** (0.001) −0.313*** (0.001)
Worker fixed effects N N Y Y
R2 0.148 0.146 0.421 0.618

Share of business owners who receive wage and salary payments

Schedule C Sole Proprietors Form K1 Partnerships Form K1 S Corps.
W-2 Data
Share of owners: (%)
Owners of EIN firms in W-2 7.4 1.1 40.4
Owners of employer firms in W-2 12.5 11.2 70.3
Owners of employer firms, top 3 10.3 7.9 59.7
Share of firms: (%)
Any owner of EIN firms in W-2 7.5 3.8 48.8
Any owners of employer firms in W-2 13.2 24.3 84.8
Any owners of employer firms, top 3 11.0 20.2 78.5
LEHD Data
Share of owners: (%)
Owners of EIN firms in UI 7.3 1.1 39.4
Owners of employer firms in UI 12.3 9.3 69.0
Owners of employer firms, top 3 9.8 6.9 59.4
Share of firms: (%)
Any owner of EIN firms in UI 7.8 4.5 48.6
Any owners of employer firms in UI 13.6 26.5 83.0
Any owners of employer firms, top 3 10.8 22.4 77.0

Share of owners who receive wage & salary payments: first year, single establishment

Schedule C Sole Proprietors Form K1 Partnerships Form K1 S Corps.
W-2 Data
Share of owners: (%)
Owners of employer firms in W-2 16.1 14.3 61.5
Owners of employer firms, top 3 13.9 11.4 57.1
Share of firms: (%)
Any owners of employer firms in W-2 17.0 26.9 74.6
Any owners of employer firms, top 3 14.6 23.5 71.1
LEHD Data
Share of owners: (%)
Owners of employer firms in UI 15.5 13.8 59.6
Owners of employer firms, top 3 13.5 11.3 55.4
Share of firms: (%)
Any owners of employer firms in UI 16.4 27.2 72.7
Any owners of employer firms, top 3 14.2 23.8 69.3
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