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

Titan Alon, David Berger*, Robert Dent, Benjamin Pugsley

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)68-85
Number of pages18
JournalJournal of Monetary Economics
Volume93
DOIs
StatePublished - Jan 2018

Keywords

  • Business dynamism
  • Entry rate
  • Firm age
  • Productivity growth

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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