Firm growth

Proportion of growth in business openings (entry rates) compared to business closures (exit rates).

This indicator is measured by the Longitudinal Employment Analysis Program (LEAP). The LEAP is based on the annual statements of remuneration paid (T4 tax slips) that Canadian businesses are required to issue to their employees for tax purposes, combined with the firm structures found in Statistics Canada's Business Register (BR). The firm-level information is organized longitudinally, using a set of methodological rules for combining firm structures over time.

A firm is considered active in a given year in the LEAP if there are associated T4 files from the firm. A firm is then determined to be an entrant if it is active in the current year, but was not active (i.e. had not issued T4s) in the previous year. Similarly, a firm is an exit in the current year if it was active in the previous year but is not active in the current year.

• Longitudinal Employment Analysis Program (LEAP)
  • Table 33-10-0087-01 – Business Dynamics measures, by industry, per province or territory
  • Table 33-10-0088-01 – Business Dynamics measures, by firm size, per province or territory
  • Table 33-10-0270-01 – Experimental estimates for business openings and closures for Canada, provinces and territories, census metropolitan areas, seasonally adjusted
  • Table 33-10-0165-01 – Quarterly estimates of business entry and exit

• Private sector businesses and employment dynamics in Canada in 2020 (The Daily, December 9, 2022)
• Business and employment dynamics data at the national level, 2019 (The Daily, September 2, 2021)
• Study: The measurement of firm entry in the longitudinal employment analysis program (The Daily, November 10, 2016)

Entry and exit rates are two of the most important measures of firm dynamics. They illustrate the extent to which new firms enter the marketplace, while less productive firms exit. New firms embed new production techniques and new ideas within them making the entry/exit process a major source contributor of new technologies for the economy. This indicator provides a snapshot of dynamism in the business sector, which is key to job creation and economic growth.