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Chart Jun 13, 2018

Concentration is high in markets with large returns to scale and network effects.

In industries such as “search engines,” “wireless carriers,” and “delivery services,” there are clear cost savings from large scale. High fixed costs—the infrastructure and technological expertise necessary to maintain a quality service—can be spread across many customers. Consequently, the respective top two firms in each market command 87 percent of the search engine market, 69 percent of the wireless carriers market, and 76 percent of the delivery services market.

Chart Jun 13, 2018

Many firms have substantial power in labor markets.

Many firms have at least some wage-setting power derived from the willingness of their employees to accept lower wages than they could earn elsewhere. Economists attempt to quantify this employee willingness to accept lower wages in terms of the so-called labor supply elasticity. That is, what percent lower employment would a firm expect if it offered 1 percent lower wages? In general, firms face relatively inelastic labor supply.

Chart Jun 13, 2018

Fewer mergers are being blocked when at least five competitors would remain.

The Federal Trade Commission almost always blocks mergers that would leave only one or two remaining competitors, while mergers leaving three or four competitors are only sometimes challenged. In recent years, antitrust regulators have become much less likely to act against mergers that would leave five, six, or seven competitors, while becoming slightly more likely to block mergers that would leave only one to four competitors.

Chart Jun 13, 2018

Businesses are taking longer to form, while business applications have declined.

A new dataset from the Census Bureau—the Business Formation Statistics—reveals that the typical time between application and business formation has steadily increased in recent years, from 4.5 months to 5.7 months between 2004 and 2013. In addition, the number of high-propensity business applications, defined as those applications that have characteristics associated with becoming an employing business, has declined from about 350,000 in 2004 to 290,000 in 2013.

Chart Jun 13, 2018

The entrepreneurship rate has fallen by almost half for workers with a bachelor’s degree.

This chart examines trends in entrepreneurship—defined here as self-employment with at least 10 employees—by the educational attainment of entrepreneurs. For people with more than a high school diploma, entrepreneurship is a less common vocation than it was 25 years ago. The decline is especially pronounced among those with advanced degrees: in 1992 4.0 percent of 25- to 54-year-olds with an advanced degree (beyond a bachelor’s) were entrepreneurs. By 2017 this rate had fallen to 2.2 percent.

Chart Jun 13, 2018

State subsidies to businesses have tripled since 1990.

This chart documents the sharp rise in state and local use of targeted business incentives for export-base industries (businesses that sell outside the local area or compete with goods and services from outside the local area). These incentives—job creation, investment, and R&D tax credits, as well as property tax abatements and job training subsidies—collectively rose from 0.5 percent of business value added in 1990 to 1.4 percent in 2015.

Chart Jun 13, 2018

Occupational licensing is common and associated with diminished worker mobility.

More than a fifth of all employees hold licenses, but the fraction varies considerably across professions. Health-care practitioners and legal workers are the most likely to be licensed, with 73 and 61 percent of workers licensed, respectively. Additionally, licensed workers—who generally must pay to be relicensed after an interstate move—are much less likely to move across state lines than are comparable workers without licenses, but only slightly less likely to move within their state.

Chart Jun 13, 2018

Health-care licensure rules vary in ways that matter for competition and mobility.

This chart focuses on one large licensed occupation, showing how licensing policies vary for nurse practitioners across the states. Though public discussion of the institution often focuses on occupations that have been more recently licensed (e.g., interior designers or tour guides), the economic impacts of licensure are likely to be especially important in the economically large health-care sector, which accounts for more than one-quarter of all licensed workers.

Chart Dec 13, 2017

Patenting is Closely Related to Innovation

Though many patents are certainly valuable to workers and firms that possess them, it might be less immediately obvious whether patents are closely associated with innovation. Measuring this link is critical to understanding both the social benefits of the patent system and the usefulness of the patent-based approach to analyzing innovation. In this chart the share of firms reporting that they had implemented an improved product, service, or business method is plotted against the number of patents generated by every 1,000 employees.