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Pay, Employment, and Dynamics of Young Firms

Tania Babina, Wenting Ma, Christian Moser (), Paige Ouimet and Rebecca Zarutskie

MPRA Paper from University Library of Munich, Germany

Abstract: Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.

Keywords: Young-Firm Pay Premium; Selection; Worker and Firm Heterogeneity; Firm Dynamics; Startups (search for similar items in EconPapers)
JEL-codes: D2 D22 E2 E24 J3 J30 J31 M1 M13 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-bec, nep-hrm and nep-mac
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Related works:
Working Paper: Pay, Employment, and Dynamics of Young Firms (2019) Downloads
Working Paper: Pay, Employment, and Dynamics of Young Firms (2019) Downloads
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