Demographic origins of the startup deficit

Fatih Karahan, Benjamin Pugsley and Aysegul Sahin

No 888, Staff Reports from Federal Reserve Bank of New York

Abstract: We propose a simple explanation for the long-run decline in the U.S. startup rate. It originates from a slowdown in labor supply growth since the late 1970s, largely pre-determined by demographics. This channel can explain roughly 60 percent of the decline and why incumbent firm survival and average growth over the lifecycle 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 1960-70s period of accelerating labor force growth.

Keywords: firm dynamics; macroeconomics; demographics; business dynamism (search for similar items in EconPapers)
JEL-codes: D22 E24 J11 (search for similar items in EconPapers)
Pages: 46
Date: 2019-05-01
New Economics Papers: this item is included in nep-gro and nep-mac
Note: Revised March 2021.
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Citations: View citations in EconPapers (16)

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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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