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The Growth Potential of Startups over the Business Cycle

The American economic review, 2017-10, Vol.107 (10), p.3182-3210 [Peer Reviewed Journal]

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Title:
The Growth Potential of Startups over the Business Cycle
Author: Sedláček, Petr ; Sterk, Vincent
Subjects: Business cycles ; Business entities ; Cost of entry ; Demand shocks ; Economic fluctuations ; Economic growth potential ; Economic models ; Economic theory ; Elasticity of demand ; Employment ; Marketing ; Start up firms ; Startups
Is Part Of: The American economic review, 2017-10, Vol.107 (10), p.3182-3210
Description: This paper shows that employment in cohorts of US firms is strongly influenced by aggregate conditions at the time of their entry. Employment fluctuations of startups are procyclical, they persist into later years, and cohort-level employment variations are largely driven by differences in firm size, rather than the number of firms. An estimated general equilibrium firm dynamics model reveals that aggregate conditions at birth, rather than post-entry choices, drive the majority of cohort-level employment variation by affecting the share of startups with high growth potential. In the aggregate, changes in startup conditions result in large, slow-moving fluctuations in employment.
Publisher: Nashville: American Economic Association
Language: English
Identifier: ISSN: 0002-8282
EISSN: 1944-7981
DOI: 10.1257/aer.20141280
Source: ProQuest Central

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