Copyright 2010, The World Bank Group. All Rights Reserved. Business demography, part 2 Dynamics of...

Copyright 2010, The World Bank Group. All Rights Reserved.

Business demography, part 2

Dynamics of the population of businesses

1

Business statistics and registers


Death

• Enterprise Death is an independent event affecting only one enterprise

• It involves the dissolution of a combination of factors of production

• It involves the deletion of an enterprise reference on the (live) business register

2


Death types

• Like enterprise births, enterprise deaths include the population of all active enterprises irrespective of employment thresholds

• In addition to enterprise deaths, exits by decline may occur in data collections using an employee threshold

• Enterprise deaths cover all enterprises, regardless of whether they are employers or not

• No general threshold is applied to the size of the enterprise• Employer enterprise deaths are deaths of enterprises with

at least one employee• Economic enterprise deaths are deaths of enterprises with

at least two employees

3


From closure to death

Enterprise deaths is defined as follows:

“A count of the number of deaths of enterprises registered to the population concerned in the business register corrected for errors. A death amounts to the dissolution of a combination of production factors with the restriction that no other enterprises are involved in the event. Deaths do not include exits from the population due to mergers, takeovers, breakups and restructuring of a set of enterprises. It does not include exits from a sub-population resulting only from a change of activity.”

4


Impact of deaths

• As well as indicators on the number of deaths, there is a demand for data on the impact of these deaths

• The impact can be measured both in terms of the effect on the labor market, i.e. the amount of employment lost, or the effect on the economy in financial terms, i.e. the amount of turnover lost

• Employment lost when an enterprise death occurs is of interest to policy makers

• Employment lost may be difficult to measure

5


Indicators for death

• Number of deaths as a percentage of the population of active enterprises

• Correlations of deaths with GDP and unemployment:• Persons employed in enterprises that die in year xx as

a proportion of the total number of persons employed in the population of active enterprises in year xx (both in head counts)

• Mean employment loss per death, measured in terms of persons employed (head count)

6


Survival

The survival of an enterprise is defined in the following way:• An enterprise born in year xx or having survived to year xx from a

previous year is considered to have survived in year xx+1 if it is active in terms of turnover and/or employment in any part of year xx+1 (= survival without changes)

• An enterprise is also considered to have survived if the linked legal unit(s) have ceased to be active, but their activity has been taken over by a new legal unit set up specifically to take over the factors of production of that enterprise (= survival by take-over)

• Activity is defined as any turnover and/or employment in the period from 1.1 to 31.12 in a given year

• This definition of survival excludes cases where enterprises merge, or are taken over by an existing enterprise in year xx

7


Indicators for survival

Survival rate of newly born enterprises− Survival rate in years xx+t, (t=1 to n) of enterprise births in xx.− Survival rate in years xx+t, (t=1 to n) of employer enterprise births in xx.− Survival rate in years xx+t, (t=1 to n) of economic enterprise births in xx.− Average survival rate in years after birth (i=1 to n) of enterprise births, employer enterprise births and economic enterprise births in the period xx, xx+t.

8


Other demographic eventsApart from births and deaths there are other types of demographic events

affecting the units in the statistical business register. Some of these lead to the creation of new businesses (births), some to the closure of businesses (deaths), but some do not. The events are:

• Change of ownership• Merger • Take-over• Break-up• Split-off• Creation of a joint venture• Cessation of a joint venture• Restructuring within an enterprise• Restructuring within an enterprise group• Change of group• Complex restructuring

9


Change of ownership

• Change of Ownership (one-to-one take-over) involves the re-structuring of the legal basis of an enterprise

10


Merger• A Merger is a consolidation of the production factors

of two or more enterprises into one new enterprise• There is no continuity or survival, but the closures of

the previous enterprises are not considered to be deaths

• Similarly the new enterprise is not considered to be a birth

11


Take-over

• Enterprises taken over are not considered to be deaths

• One of the original enterprises does survive• The remaining original enterprises are closed

12


Break-up

• A Break-up is splitting of the production factors of an enterprise into two or more new enterprises

• There is no continuity or survival• The closure of the previous enterprise is not

considered to be a death• The new enterprises are not considered to be

births

13


Split-off

• A Split-off is similar to a break-up, but in this case the original enterprise does survive

• There is no death, but one or more new enterprises are created

14


Creation or cessation of joint venture• A joint venture is created when two or more

independent enterprises agree to commit some of their resources to work together

• None of the original enterprises exercise outright control over the entity created

• Joint ventures may be considered to be births• The cessation of a joint venture mirrors the above

15


Restructure within Enterprise

• A Re-structure within Enterprise involves one enterprise, which survives throughout

• Examples include opening or closing local units

• This event is of no real interest for business demography

16


Restructure within enterprise group

• Re-structure within Enterprise Group is creation and/or cessation of one or more enterprises under common ownership

• It does not result in any births or deaths

17


Complex Re-structure

• A Complex Re-structure concerns two or more enterprise groups

• A typical example is where two or more enterprise groups trade subsidiary enterprises

• It does result in any births or deaths

18


Reactivation• A Reactivation involves an enterprise

becoming dormant for a period of less than two years, then recommencing activity

• It does not constitute a birth or death

19


Growth

• The term growth is used in business demography to study how cohorts of enterprises develop

• Growth is measured in terms of a change in size (in this case employment) over time

• It is expected that growth for births will generally be positive

• To fully evaluate growth of new enterprises it is necessary to follow them over a longer period of time

• Some annual figures on the population of active enterprises are necessary in order to compare the statistics on growth in newly born enterprises with changes in the population as a whole

20


Indicators for growth

• Rate of growth of the number of persons employed in newly born enterprises

• Rate of growth of surviving enterprises• Average number of jobs per enterprise in

newly born enterprises during the first five years of operation

21

Copyright 2010, The World Bank Group. All Rights Reserved. Business demography, part 2 Dynamics of...

Documents

Transcript of Copyright 2010, The World Bank Group. All Rights Reserved. Business demography, part 2 Dynamics of...