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The role of start-ups in structural transformation

Robert C. Dent, Fatih Karahan (), Benjamin Pugsley () and Aysegul Sahin ()
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Robert C. Dent: Federal Reserve Bank of New York

No 762, Staff Reports from Federal Reserve Bank of New York

Abstract: The U.S. economy has been going through a striking structural transformation—the secular reallocation of employment across sectors—over the past several decades. We propose a decomposition framework to assess the contributions of various margins of firm dynamics to this shift. Using firm-level data, we find that at least 50 percent of the adjustment has been taking place along the entry margin, owing to sectors receiving shares of start-up employment that differ from their overall employment shares. The rest is mostly the result of life cycle differences across sectors. Declining overall entry has a small but growing effect of dampening structural transformation.

Keywords: structural transformation; employment dynamics; sectoral reallocation (search for similar items in EconPapers)
JEL-codes: E24 J00 J23 L25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-ent, nep-mac, nep-sbm and nep-tid
Date: 2016-01-01
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Journal Article: The Role of Startups in Structural Transformation (2016) Downloads
Working Paper: The Role of Start-Ups in StructuralTransformation (2016) Downloads
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