Older and slower: The startup deficit’s lasting effects on aggregate productivity growth

Titan Alon, David Berger, Robert Dent and Benjamin Pugsley

Journal of Monetary Economics, 2018, vol. 93, issue C, 68-85

Abstract: Declining firm entry and the aging incumbent firms have meaningful implications for sluggish U.S. aggregate productivity growth. We provide a framework to characterize the contributions to industry productivity growth across the firm age distribution then apply it to firm-level Census data. Several findings emerge: the relationship between firm age and productivity growth is downward sloping and convex; the magnitudes are substantial but fade quickly; selection and reallocation predominantly drive higher productivity growth of young firms. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980 and are expanded upon with an IV strategy and standard model of firm dynamics.

Keywords: Entry rate; Firm age; Productivity growth; Business dynamism (search for similar items in EconPapers)
JEL-codes: D22 D24 E23 J11 L1 O4 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (52)

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Related works:
Working Paper: Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth (2018)
Working Paper: Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth (2017)
Working Paper: Older and Slower: The Startup Deficit's Lasting Effects on Aggregate Productivity Growth (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:93:y:2018:i:c:p:68-85

DOI: 10.1016/j.jmoneco.2017.10.004

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