Each bar shows the annual average log change in the share of private sector employees at young firms during the indicated cycle episode, deviated about the sample mean log change of minus 2.2 log points per year. Green bars denote aggregate expansion episodes, and red bars denote aggregate contraction episodes. All annual changes are from one mid-March payroll period to the next. For each cycle episode, the reported interval represents the average annual log change from March of the initial to March of the ending year. For example, 1980-83 represents the average annual log changes for 1980-81, 1981-82 and 1982-83. See working paper for an exact description of the calculations.

While the share of private-sector employment at young firms has declined over the last 35 years, it is highly sensitive to cyclical conditions, as shown in this figure. Also, those swings—both up and down—are closely related to housing prices; when housing prices rise, so does the share of employment at young firms, with the opposite effect occurring when housing prices fall.