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Older and Slower: The Startup Deficit's Lasting Effects on Aggregate Productivity Growth / Titan Alon, David Berger, Robert Dent, Benjamin Pugsley.
- Format:
- Book
- Author/Creator:
- Alon, Titan.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w23875.
- NBER working paper series no. w23875
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Older and Slower
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2017.
- Summary:
- We investigate the link between declining firm entry, aging incumbent firms and sluggish U.S. productivity growth. We provide a dynamic decomposition framework to characterize the contributions to industry productivity growth across the firm age distribution and apply this framework to the newly developed Revenue-enhanced Longitudinal Business Database (ReLBD). Overall, several key findings emerge: (i) the relationship between firm age and productivity growth is downward sloping and convex; (ii) the magnitudes are substantial and significant but fade quickly, with nearly 2/3 of the effect disappearing after five years and nearly the entire effect disappearing after ten; (iii) the higher productivity growth of young firms is driven nearly exclusively by the forces of selection and reallocation. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980. Using an instrumental variables strategy we find a consistent pattern across states/MSAs in the U.S. The patterns are broadly consistent with a standard model of firm dynamics with monopolistic competition.
- Notes:
- Print version record
- September 2017.
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