Pay, Employment, and Dynamics of Young Firms
July 2019
Working Paper Number:
CES-19-23
Abstract
Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.
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:
exogeneity,
payroll,
quarterly,
company,
earnings,
employee,
employ,
entrepreneur,
entrepreneurship,
finance,
younger firms,
estimates employment,
employment growth,
workforce,
wage growth,
employment dynamics,
prospect,
earn,
earner,
rent,
firms young,
earnings age,
earnings workers,
earnings growth
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Standard Industrial Classification,
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National Science Foundation,
Ordinary Least Squares,
Federal Reserve Bank,
Organization for Economic Cooperation and Development,
Longitudinal Business Database,
Alfred P Sloan Foundation,
Longitudinal Employer Household Dynamics,
AKM,
Employer-Household Dynamics,
International Trade Research Report
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