Business Formation in Wisconsin During and After the Great Recession

Junjie Guo

Executive Summary:

New businesses are an increasingly important component of growth in output, employment, and productivity. We analyze new data from the U.S. Census Bureau to gain insight on business formations in Wisconsin before, during, and after the Great Recession of 2007-2009. Since the start of the recession, new business formations in Wisconsin have fallen by about 30%, and have remained at a low level. Business formation also fell nationally, but by a smaller magnitude. Moreover, applications for new businesses have recovered somewhat nationwide over the last few years, while in Wisconsin they have remained flat. We also show that the duration between application and formation of a business increased over the past decade both nationally and in Wisconsin, increasing by roughly one month (or 40%) in the state. While we focus on outcomes rather than policy, our results suggest that reforms of incentive, financing, and regulatory policies to aid and simplify new business formation may help improve the economy in Wisconsin.

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