Older and slower: The startup deficit's lasting effects on aggregate productivity growth

Journal Article (Journal Article)

Declining firm entry and the aging incumbent firms have meaningful implications for sluggish U.S. aggregate productivity growth. We provide a framework to characterize the contributions to industry productivity growth across the firm age distribution then apply it to firm-level Census data. Several findings emerge: the relationship between firm age and productivity growth is downward sloping and convex; the magnitudes are substantial but fade quickly; selection and reallocation predominantly drive higher productivity growth of young firms. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980 and are expanded upon with an IV strategy and standard model of firm dynamics.

Full Text

Duke Authors

Cited Authors

  • Alon, T; Berger, D; Dent, R; Pugsley, B

Published Date

  • January 1, 2018

Published In

Volume / Issue

  • 93 /

Start / End Page

  • 68 - 85

International Standard Serial Number (ISSN)

  • 0304-3932

Digital Object Identifier (DOI)

  • 10.1016/j.jmoneco.2017.10.004

Citation Source

  • Scopus