Flight to Safety: How Economic Downturns Affect Talent Flows to Startups

Shai Bernstein, Richard R. Townsend and Ting Xu

No 27907, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using proprietary data from AngelList Talent, we study how individuals’ job search and application behavior changed during the COVID downturn. We find that job seekers shifted their searches toward more established firms and away from early-stage startups, even within the same individual over time. Simultaneously, they broadened their other search parameters. Relative to more established firms, early-stage startups experienced a decline in applications, primarily driven by higher quality candidates. These declines hold within a firm or job posting over time. Our findings uncover a flight to safety channel in the labor market, which may amplify the pro-cyclical nature of entrepreneurial activities.

JEL-codes: E32 J22 J24 L26 M13 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-ent, nep-hrm, nep-ino, nep-lma and nep-mac
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Citations: View citations in EconPapers (13)

Published as Shai Bernstein & Richard R Townsend & Ting Xu & Holger Mueller, 2024. "Flight to Safety: How Economic Downturns Affect Talent Flows to Startups," The Review of Financial Studies, vol 37(3), pages 837-881.

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