Map of the week from DWS. The proliferation of new businesses since the onset of the epidemic will have serious consequences.
Starting a self-employment process is not easy. This is not very common in times of economic crisis. Ten years ago, during the Great Recession, which saw the fall of the Lehman brothers, various measures in favor of creation and entrepreneurship declined sharply. In contrast, the latest and most attractive work report from the National Center for Economic Research (NBER) has seen a surge in US business creation activity since the COVID-19 hit the economy.1.
As our map of the week shows below, the number of self-employed, whether they are established in a business or not, is increasing every year. Creating more new businesses than one would expect from business closures during an economic downturn. It is not clear why the epidemic once encouraged entrepreneurs in this century, a similar pattern has not been found in other countries.2.
The US government publishes creative statistics
New businesses at an extraordinary frequency.
The availability of data may be partly responsible for this. In the United States, filing a business tax registration application is often done automatically through online applications, so disruptions in management companies seem to have had little impact on their follow-up. US government releases new business startups with extraordinary frequency, providing fertile ground for economists3. It is very difficult to monitor business closures because the non-survey response rate is naturally high for businesses leaving the business.
Overall, the NBER study shows that the demand for business start-ups is exceptionally high since the onset of the epidemic. There are encouraging signs that include many initiatives that will promote job creation, innovation and productivity growth in the coming years. Christian Sherman, an economist who specializes in DWS in the United States, said, “Only time will tell whether this is true. But monitoring the situation would certainly be advisable.”
Evolution of self-employed workers in the United States
Blue: Self-employed, linked (left axis)
Green: Self-employed, unattached (legal print)