The Nature of Firm Growth

Vincent Sterk, SedlÃ¡Ä ek, Petr and Benjamin Pugsley
Authors registered in the RePEc Author Service: Petr Sedlacek

No 12670, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Only half of all startups survive past the age of five and surviving businesses grow at vastly different speeds. Using micro data on employment in the population of U.S. businesses, we estimate that the lion's share of these differences is driven by ex-ante heterogeneity across firms, rather than by ex-post shocks. We embed such heterogeneity in a firm dynamics model and study how ex-ante differences shape the distribution of firm size, ``up-or-out'' dynamics, and the associated gains in aggregate output. ``Gazelles'' --a small subset of startups with particularly high growth potential-- emerge as key drivers of these outcomes. Analyzing changes in the distribution of ex-ante firm heterogeneity over time reveals that the birth rate and growth potential of gazelles has declined, creating substantial aggregate losses.

Keywords: Firm dynamics; Startups; Macroeconomics; Big data (search for similar items in EconPapers)
JEL-codes: D22 E23 E24 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-bec, nep-ent, nep-mac, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
https://cepr.org/publications/DP12670 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: The Nature of Firm Growth (2021)
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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12670

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP12670

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().