The growth potential of startups over the business cycle

Vincent Sterk and Petr Sedlacek
Additional contact information
Vincent Sterk: University College London

No 84, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: This paper shows that job creation of cohorts of U.S. firms is strongly influenced by aggregate conditions at the time of their entry. Using data from the Business Dynamics Statistics (BDS) we follow cohorts of young firms and document that their employment levels are very persistent and largely driven by the intensive margin (average firm size) rather than the extensive margin (number of firms). To differentiate changes in the composition of startup cohorts from post-entry choices and to evaluate aggregate effects, we estimate a general equilibrium firm dynamics model using BDS data. We find that even for older firms, the aggregate state at birth drives the vast majority of variations in employment across cohorts of the same age. The key force behind this result is fluctuation in choices made by startups that determine their potential to grow large. At the aggregate level, startup decisions account for the large low-frequency fluctuations observed in the employment rate.

Date: 2014
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2014/paper_84.pdf (application/pdf)

Related works:
Journal Article: The Growth Potential of Startups over the Business Cycle (2017)
Working Paper: The Growth Potential of Startups over the Business Cycle (2014)
Working Paper: The growth potential of startups over the business cycle (2014)
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:red:sed014:84

Access Statistics for this paper

More papers in 2014 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().