13/5/2013: Kauffman Index of Entrepreneurial Activity, 2012

Some absolutely fascinating data and insights on entrepreneurship in the US over the period of 1996-2012 in Fairlie, Robert W., Kauffman Index of Entrepreneurial Activity 1996-2012 (April 2013) (http://ssrn.com/abstract=2256032 or http://dx.doi.org/10.2139/ssrn.2256032)

The paper is based on the Kauffman Index of Entrepreneurial Activity - an "indicator of new business creation in the United States. Capturing new business owners in their first month of significant business activity, this measure provides the earliest documentation of new business development across the country. The percentage of the adult, non-business owner population that starts a business each month is measured using data from the Current Population Survey (CPS). In addition to this overall rate of entrepreneurial activity, separate estimates for specific demographic groups, states, and select metropolitan statistical areas (MSAs) are presented. The Index provides the only national measure of business creation by specific demographic groups."

The paper extends the Index to 2012 data "with consideration of trends in the rates of entrepreneurial activity over the seventeen-year period between 1996 and 2012."

Key findings for 2012 data update:

• "The rate of business creation declined from 320 out of 100,000 adults in 2011 to 300 out of 100,000 adults in 2012. 
• "The business creation rate of 0.30 percent translates into approximately 514,000 new business owners each month during 2012; it was 543,000 in 2011. 
• "The decline in the business creation rate to 0.30 percent in 2012 is …only slightly higher than pre-recessionary and long-term levels. The decline in business creation over the past year may be due to improving labor market conditions putting less pressure on individuals to start businesses out of necessity.
• "The overall decline in business creation rates was entirely driven by a substantial decline in business creation rates among men. Entrepreneurial activity remained unchanged in 2012 for women.
• "Immigrants were nearly twice as likely as were the native-born to start businesses each month in 2012. The immigrant rate of entrepreneurial activity decreased from 0.55 percent in 2011 to 0.49 percent in 2012.

• "Over the past seventeen years, Latinos, Asians, and immigrants experienced rising shares of all new entrepreneurs, partly because of rising rates of entrepreneurship, but also because of increasing populations. The oldest age group (ages 55–64) also experienced a rising share of all new entrepreneurs, mainly because it represents an increasing share of the population.
• "Although the entrepreneurship rate declined for high school dropouts from 2011 to 2012 (0.57 percent to 0.52 percent), this group has the highest rate of business creation, which may be due to more limited labor market opportunities than for more highly educated groups.

• "The construction industry had the highest rate of entrepreneurial activity of all major industry groups in 2012 (1.43 percent). The second-highest rate of entrepreneurial activity was in the services industry (0.41 percent).
• "The states with the highest rates of entrepreneurial activity were Montana (530 per 100,000 adults), Vermont (520 per 100,000 adults), New Mexico (520 per 100,000 adults), Alaska (430 per 100,000 adults), and Mississippi (430 per 100,000 adults). 
• "The states with the lowest rates of entrepreneurial activity were Minnesota (150 per 100,000 adults), Nebraska (170 per 100,000 adults), Michigan (180 per 100,000 adults), Wisconsin (180 per 100,000 adults), and Ohio (190 per 100,000 adults).

• "The states experiencing the largest increases in entrepreneurial activity rates over the past decade were Nevada (0.21 percentage points), Georgia (0.16 percentage points), Vermont (0.13 percentage points), California (0.12 percentage points), Louisiana (0.12 percentage points), and Massachusetts (0.12 percentage points).
• "States that experienced the largest decreases in entrepreneurial activity rates were Wyoming (-0.13 percentage points), Wisconsin (-0.12 percentage points), and South Dakota (-0.10).
• "Among the fifteen largest MSAs in the United States, Miami (0.56 percent) had the highest entrepreneurial activity rate in 2012, and Detroit (0.10 percent) had the lowest rate.