1. Introduction
Some rise by sin, and some by virtue fall:1 Firm dynamics, market structure and performance
The New Zealand economy is a complex system whose operation cannot be fully understood by pondering macroeconomic statistics. With recent advances in data availability, policymakers have benefited from a deeper microeconomic understanding of the dynamics of the New Zealand economy. Much of the work done in this area has focused on the key economic growth parameters of labour productivity (value-added per unit of labour) and employment. Examples include understanding the contribution of firm dynamics to employment growth (Carroll et al. 2002), productivity growth (Law & McLellan 2005), the distribution of firm size (Dixon et al. 2005), the effects of agglomeration (Maré & Timmins 2006), and the role of employer-employee matching (Maré & Hyslop 2006). Analyses of this sort are becoming common throughout the OECD, helping to benchmark market dynamics across countries and shape international understanding of the appropriate policy settings for economic growth (eg, Ahn 2001, Scarpetta et al. 2002, OECD 2004).
Statistics New Zealand (SNZ), together with the Inland Revenue Department (IRD), has been instrumental in enabling work of this sort to be done in New Zealand by allowing the relevant administrative & survey data to be accessed in a way that protects the privacy and confidentiality of individuals and businesses. A key focus of SNZ's work has been to determine whether they can provide timely new official statistics on the microeconomic performance of New Zealand businesses using a Longitudinal Business Database (LBD).2
From a research perspective, the breadth of data included within the prototype LBD enables advances to be made in many of the microeconomic studies previously investigated in New Zealand, as well as opening up many new avenues for investigation. The purpose of this paper is to explore and highlight some of this potential. Section 2 outlines the contents of the LBD, while section 3 discusses the choice of performance metrics used in this paper. Section 4 presents a selection of outputs from the data, with reasons for being cautious about those outputs left to section 5. Section 6 concludes by reiterating the strengths of the data and briefly outlining potential future work.
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