Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of New York
Staff Reports
Demographic origins of the startup deficit
Fatih Karahan
Benjamin Pugsley
Aysegul Sahin
Abstract

We propose a simple explanation for the long-run decline in the startup rate. It was caused by a slowdown in labor supply growth since the late 1970s, largely pre-determined by demographics. This channel explains roughly two-thirds of the decline and why incumbent firm survival and average growth over the lifecycle have been little changed. We show these results in a standard model of firm dynamics and test the mechanism using shocks to labor supply growth across states. Finally, we show a longer startup rate series, imputed using historical establishment tabulations, that rises over the 1960-70s period of accelerating labor force growth.


Download Full text
Download Appendix
Cite this item
Fatih Karahan & Benjamin Pugsley & Aysegul Sahin, Demographic origins of the startup deficit, Federal Reserve Bank of New York, Staff Reports 888, 01 May 2019.
More from this series
JEL Classification:
Subject headings:
Keywords: firm dynamics; demographics; business dynamism; macroeconomics
For corrections, contact Amy Farber ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal