òòò½Íø Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Demographic Origins of the Start-up Deficit
òòò½Íø Review
vol. 114,
no. 7, July 2024
(pp. 1986–2023)
Abstract
We propose a simple explanation for the long-run decline in the US start-up rate. It originates from a slowdown in labor supply growth since the late 1970s, largely predetermined by demographics. This channel can explain roughly half of the decline and why incumbent firm survival and average growth over the life cycle have changed little. We show these results in a standard model of firm dynamics and test the mechanism using cross-state variation in labor supply growth. Finally, we show that a longer entry rate series imputed using historical establishment tabulations rises over the 1960s–1970s period of accelerating labor force growth.Citation
Karahan, Fatih, Benjamin Pugsley, and AyÅŸegül Åžahin. 2024. "Demographic Origins of the Start-up Deficit." òòò½Íø Review 114 (7): 1986–2023. DOI: 10.1257/aer.20210362Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J11 Demographic Trends, Macroeconomic Effects, and Forecasts
- J22 Time Allocation and Labor Supply
- J23 Labor Demand
- M11 Production Management