Firm Dynamics, Persistent Effects of Entry Conditions, and Business Cycles
January 2017
Working Paper Number:
CES-17-29
Abstract
This paper examines how the state of the economy when businesses begin operations affects
their size and performance over the lifecycle. Using micro-level data that covers the entire universe of businesses operating in the U.S. since the late 1970s, I provide new evidence that businesses born in downturns start on a smaller scale and remain smaller over their entire lifecycle. In fact, I find no evidence that these differences attenuate even long after entry. Using new data on the productivity and composition of startup businesses, I show that this persistence is related to selection at entry and demand-side channels.
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demand,
market,
estimating,
sale,
growth,
entrepreneurial,
startup,
proprietorship,
entrepreneur,
business startups,
entrepreneurship,
recession,
employment growth,
trend,
economically,
revenue,
gdp,
decline,
recessionary,
downturn,
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