TY  - JOUR
AU  - Alon, Titan
AU  - Berger, David
AU  - Dent, Robert
AU  - Pugsley, Benjamin
TI  - Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 23875
PY  - 2017
Y2  - September 2017
DO  - 10.3386/w23875
UR  - http://www.nber.org/papers/w23875
L1  - http://www.nber.org/papers/w23875.pdf
N1  - Author contact info:
Titan Alon
University of California San Diego
Department of Economics
9500 Gilman Drive #0508
La Jolla, CA 92093
E-Mail: talon@ucsd.edu

David W. Berger
Department of Economics
Duke University
419 Chapel Drive
Social Science Building 231
Durham, NC 27708
Tel: 919/660-1853
E-Mail: david.berger@duke.edu

Robert C. Dent
Nomura Securities
E-Mail: robcdent@gmail.com

Benjamin Pugsley
University of Notre Dame
Department of Economics
Notre Dame, IN 46556
E-Mail: bpugsley@nd.edu
AB  - We investigate the link between declining firm entry, aging incumbent firms and sluggish U.S. productivity growth. We provide a dynamic decomposition framework to characterize the contributions to industry productivity growth across the firm age distribution and apply this framework to the newly developed Revenue-enhanced Longitudinal Business Database (ReLBD). Overall, several key findings emerge: (i) the relationship between firm age and productivity growth is downward sloping and convex; (ii) the magnitudes are substantial and significant but fade quickly, with nearly 2/3 of the effect disappearing after five years and nearly the entire effect disappearing after ten; (iii) the higher productivity growth of young firms is driven nearly exclusively by the forces of selection and reallocation. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980. Using an instrumental variables strategy we find a consistent pattern across states/MSAs in the U.S. The patterns are broadly consistent with a standard model of firm dynamics with monopolistic competition.
ER  -