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

Shai Bernstein, Richard R Townsend and Ting Xu

The Review of Financial Studies, 2024, vol. 37, issue 3, 837-881

Abstract: Using proprietary data from AngelList Talent, we study how startup job seekers’ search and application behavior changed during the COVID-19 downturn. We find that workers shifted their searches and applications away from less-established startups and toward more-established ones, even within the same individual over time. At the firm level, this shift was not offset by an influx of new job seekers. Less-established startups experienced a relative decline in the quantity and quality of applications, ultimately affecting their hiring. Our findings uncover a flight-to-safety channel in the labor market that may amplify the procyclical nature of entrepreneurial activities.

JEL-codes: E32 J22 J24 L26 M13 (search for similar items in EconPapers)
Date: 2024
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