The Role of Start-Ups in StructuralTransformation
January 2016
Working Paper Number:
CES-16-38
Abstract
The U.S. economy has been going through a striking structural transformation'the secular reallocation of employment across sectors'over the past several decades. We propose a decomposition framework to assess the contributions of various margins of firm dynamics to this shift. Using firm-level data, we find that at least 50 percent of the adjustment has been taking place along the entry margin, owing to sectors receiving shares of start-up employment that differ from their overall employment shares. The rest is mostly the result of life cycle differences across sectors. Declining overall entry has a small but growing effect of dampening structural transformation.
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market,
manufacturing,
growth,
employ,
merger,
acquisition,
labor,
sector,
shift,
employment growth,
trend,
bank,
firm dynamics,
sectoral,
employment dynamics,
declining,
decline,
relocation
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Federal Reserve Bank,
Longitudinal Business Database,
Federal Reserve System,
Business Dynamics Statistics,
Census Bureau Business Dynamics Statistics
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