Demographic Origins of the Start-up Deficit

Fatih Karahan, Benjamin Pugsley and Ayşegül Şahin

American Economic Review, 2024, vol. 114, issue 7, 1986-2023

Abstract: We propose a simple explanation for the long-run decline in the US start-up rate. It originates from a slowdown in labor supply growth since the late 1970s, largely predetermined by demographics. This channel can explain roughly half of the decline and why incumbent firm survival and average growth over the life cycle 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 1960s–1970s period of accelerating labor force growth.

JEL-codes: D22 D25 E24 J11 J22 J23 M11 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: Demographic Origins of the Startup Deficit (2019)
Working Paper: Demographic origins of the startup deficit (2019)
Working Paper: Demographic Origins of the Startup Deficit (2019)
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DOI: 10.1257/aer.20210362

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