Startup Types and Macroeconomic Performance in Europe

Ralph De Haas, Vincent Sterk and Neeltje Van Horen

No 17400, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We construct a new dataset of 1.3 million European startups. Cluster analysis identifies five startup types present across countries, industries, and cohorts. Initial differences across types persist, and each displays a characteristic life cycle in productivity, employment, and survival. We embed these startup types in a firm dynamics model with heterogeneous entry, investment, and financing, and quantify how policy can shift cohort composition. Differentiated corporate tax reforms favoring high-performance types yield substantial productivity gains. Uniform fiscal instruments differ sharply: capital subsidies raise output and productivity through composition effects, labor subsidies reduce them, and interest subsidies are roughly neutral.

Keywords: Startups; Firm dynamics; Capital structure; Corporate tax; Subsidies (search for similar items in EconPapers)
JEL-codes: D22 E24 E62 G32 G38 H25 L25 L26 (search for similar items in EconPapers)
Date: 2022-06
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Working Paper: Start-up types and macroeconomic performance in Europe (2022)
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