Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7368304 | Journal of Monetary Economics | 2018 | 29 Pages |
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.
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Authors
Titan Alon, David Berger, Robert Dent, Benjamin Pugsley,