University of Maryland
For pioneering research advancing our understanding of job creation and destruction, productivity growth, and the role of small business and entrepreneurial firms in economic development.
Professor John Haltiwanger has made significant contributions to the field of entrepreneurship by improving our understanding of job creation and destruction, productivity growth, and the role of small and medium sized firms (SMEs) in economic development. He has played a major role in the careful development of large, longitudinal firm-level datasets, and introduced a novel and widely adopted measure of firm growth that addresses previous statistical biases. His work has influenced public policy and national statistical offices around the world.
One of Haltiwanger’s contributions is to question the conventional wisdom of the job creation ability of small business. He provides evidence that large and mature firms account for most of the newly created manufacturing jobs, and that these jobs are of higher quality than those in SMEs in that they are more likely to persist in subsequent years. A further major contribution refers to his work on the importance of firm age as opposed to size, showing that the job creation in small firms take place in the first few years of their existence, as captured in the “up-or-out” dynamics of young firms.
A second area of research pioneered by Haltiwanger is the decomposition of productivity growth into contributions from continuing, entering, and exiting firms. He shows that the largest component of growth can be attributed to continuing firms improving their productivity over time, for example, by gaining experience and learning about more efficient production-techniques and profitable exploitation of existing market opportunities. The second largest component of productivity growth is the net entry of firms with above-average productivity and the exit of firms with below-average productivity.
Haltiwanger also documents a decline in recent decades in the rate of business startups and business dynamism, i.e., the pace of job creation and destruction, and flows of workers across firms. This trend could pose a serious problem for society to the extent that reallocation of workers towards higher-productivity opportunities is important for productivity growth at the aggregate level.
In sum, Haltiwanger has made original and substantial contributions that advance our understanding of the role of small business and entrepreneurial firms in economic development. The value of his pioneering, meticulous, and facts-based work for the development of both entrepreneurship research and policymaking cannot be overstated.
See a summary from the 2021 Award Ceremony.
Titles, dates and places given above refer to the time of the Award.