Measuring business ownership across countries and over time: Extending the Compendia data base Chantal Hartog EIM Business and Policy Research André van.

Measuring business ownership across countries and over time:

Extending the Compendia data base

Chantal Hartog

EIM Business and Policy Research

André van Stel

EIM and University of Amsterdam

COMPENDIA: COMParative ENtrepreneurship Data for International Analysis

• Business ownership rates for 23 OECD countries, 1972-2006, annually

• Number of non-agricultural business owners as a fraction of total labour force

• Source data: OECD Labour Force Statistics

• Harmonisations applied by EIM Business and Policy Research, Zoetermeer, the Netherlands

Countries originally included in COMPENDIA (23)

• 15 EU countries• Iceland, Norway, Switzerland• United States, Canada, Japan, Australia, New Zealand

Extension with new countries (7)• Poland• Hungary• Czech Republic• Slovak Republic• Mexico• Korea• Turkey

Business ownership definition

Number of business owners in COMPENDIA include:

• Unincorporated self-employed• Incorporated self-employed (owner/managers of

incorporated businesses)

Excluded are:• Self-employed in agriculture, hunting, forestry,

fishing• Unpaid family workers• Self-employed as secondary occupation

Harmonisations made in COMPENDIA

• Harmonisations across countries

- Incorporated self-employed. Formally,

they are employee in their own business.

- Unpaid family workers

• Harmonisations over time

Trend breaks (definition changes over time)

Owner/managers of incorporated businesses (OMIBs)

• Extent to which OMIBs are measured varies by country, depending on survey questions used.

• Example: US Current Population Survey

- Are you employed by a government, a private company or a nonprofit organization or are you self-employed?

- In case self-employed: Is this business incorporated?

- Here a number of OMIBs are detected. However, this number is NOT included in self-employment count.

- But even the detected number is not complete, OMIBs who classify themselves as employee are not detected (Bregger, 1996).

Inclusion of OMIBs in self-employment count varies by country

In OECD Employment Outlook, June 2000, Annex 5A,

the inclusion of OMIBs in OECD Labour Force Statistics is categorised as follows:

1. Excluding all OMIBs

2. Classification of OMIBs is unclear

3. Including all OMIBs

4. Including most OMIBs

5. Excluding most OMIBs

Harmonisations applied in COMPENDIA

Number of business owners in COMPENDIA:• If definition is “including all OMIBs”: reported number in

OECD Labour Force Statistics• Otherwise:- European countries: maximum of OECD and number of

non-primary private enterprises according to The European Observatory for SMEs (1994)

- Non-European countries: country specific sources.

For example: US number of OMIBs estimated by the number of employer firms (US Small Business Administration)

Impact of corrections

The raise factor:

Total number of business owners according to COMPENDIA / Reported number in OECD Labour Force Statistics,

varies from 1 (no correction needed) to 1.26 (France) to 1.56 (US)

Illustrations

Business ownership rate 2004, Compendia

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0.05

0.10

0.15

0.20

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No

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Sw

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Sw

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Fra

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Fin

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Ja

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Ge

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Gre

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Business ownership rate 2004, OECD

0.00

0.05

0.10

0.15

0.20

0.25L

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Den

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No

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Sw

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Sw

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Fra

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Fin

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Au

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Jap

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Ger

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Un

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Sta

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Bel

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Un

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Kin

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Net

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Can

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Icel

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Rank Compendia Rank OECD Greece 1 2 Italy 2 1 Australia 3 10 New Zealand 4 3 Portugal 5 4 Iceland 6 9 Spain 7 5 Canada 8 17 Ireland 9 6 Netherlands 10 11 United Kingdom 11 7 Belgium 12 8 United States 13 19 Germany 14 12 Japan 15 16 Austria 16 15 Finland 17 13 France 18 21 Sweden 19 14 Switzerland 20 18 Norway 21 23 Denmark 22 20 Luxembourg 23 22

Business ownership rate Sweden, trend break 1987

0.00

0.02

0.04

0.06

0.08

0.10

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

OECD Compendia

Business ownership rates in 2006

0.00

0.05

0.10

0.15

0.20

0.25

Italy

Korea

Mexic

oGr

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Czec

h Rep

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Austr

alia

Turke

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w Ze

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Portu

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Cana

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ds Icelan

dUn

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mBe

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Irelan

dSlo

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epub

lic USA

Hung

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rman

yAu

stria

Norw

ay Japan

Polan

dFin

land

Swed

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Denm

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and

Luxe

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Developments in four countries, 1972-2006 (1)

Developments in four countries, 1983-2006 (2)

Limitations• Correction factor for OMIBs applied constantly

over time.

• Sometimes crude approximations when little information available (e.g. Switzerland).

• Nevertheless, the COMPENDIA data construction contributes to a better comparability of business ownership rates across countries and over time.

Extending Compendia (pilot project EIM - OECD)

Distinction of number of business owners by:

• employer / own account worker

• sector

• gross inflow / outflow (in terms of persons, not businesses)

Statistical experiments at the regional level?

• Create times series employer / own account worker at regional level and compare to national pattern

• Create labour force survey capable of directly measuring number of OMIBs, and compare results with official statistics