Startups Create Many Jobs, but They Often Don't Last

Maximiliano Dvorkin and Charles Gascon

The Regional Economist, 2017, vol. 25, issue 3

Abstract: Despite the important role startups play in job growth, the importance of mature firms should not be understated. An important difference between young and old firms is the wage they pay. Older firms pay, on average, a much higher wage than younger firms. This is because a firm?s success is a function of productivity: Output per worker at surviving older firms is higher and, therefore, workers are paid a higher wage. Thus, while startups are very dynamic and have an important role in net job creation, in terms of total employment and earnings they tend to have a modest impact. Only the few firms that survive to the 11+ year age group have a lasting impact on employment.

Date: 2017
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