The Nature of Firm Growth

Vincent Sterk, Petr Sedlacek and Benjamin Pugsley

American Economic Review, 2021, vol. 111, issue 2, 547-79

Abstract: About one-half of all startups fail within five years, and those that survive grow at vastly different speeds. Using Census microdata, we estimate that most of these differences are determined by ex ante heterogeneity rather than persistent ex post shocks. Embedding such heterogeneity in a firm dynamics model shows that the presence of ex ante heterogeneity (i) is a key determinant of the firm size distribution and firm dynamics, (ii) can strongly affect the macroeconomic effects of firm-level frictions, and (iii) helps understand the recently documented decline in business dynamism by showing a disappearance of high-growth startups ("gazelles") since the mid-1980s.

JEL-codes: D22 D24 E24 J23 L11 M13 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

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Related works:
Working Paper: The Nature of Firm Growth (2018)
Working Paper: The Nature of Firm Growth (2018)
Working Paper: The Nature of Firm Growth (2017)
Working Paper: The nature of firm growth (2017)
Working Paper: The Nature of Firm Growth (2017)
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DOI: 10.1257/aer.20190748

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