Demographic Origins of the Startup Deficit

Fatih Karahan, Benjamin Pugsley and Aysegul Sahin

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We propose a simple explanation for the long-run decline in the startup rate. It was caused by a slowdown in labor supply growth since the late 1970s, largely pre-determined by demographics. This channel explains roughly two-thirds of the decline and why incumbent firm survival and average growth over the lifecycle have been little changed. We show these results in a standard model of firm dynamics and test the mechanism using shocks to labor supply growth across states. Finally, we show that a longer startup rate series imputed using historical establishment tabulations rises over the 1960-70s period of accelerating labor force growth.

Keywords: Firm dynamics; Demographics; Business Dynamism; Macroeconomics (search for similar items in EconPapers)
JEL-codes: D22 E24 J11 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2019-07
New Economics Papers: this item is included in nep-gro, nep-his, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

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https://www2.census.gov/ces/wp/2019/CES-WP-19-21.pdf First version, 2019 (application/pdf)

Related works:
Journal Article: Demographic Origins of the Start-up Deficit (2024)
Working Paper: Demographic origins of the startup deficit (2019)
Working Paper: Demographic Origins of the Startup Deficit (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:19-21

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