Journal article
The nature of firm growth
- Abstract:
- About one-half of all startups fail within five years, and those that survive grow at vastly different speeds. Using Census microdata, we estimate that most of these differences are determined by ex ante heterogeneity rather than persistent ex post shocks. Embedding such heterogeneity in a firm dynamics model shows that the presence of ex ante heterogeneity (i) is a key determinant of the firm size distribution and firm dynamics, (ii) can strongly affect the macroeconomic effects of firm-level frictions, and (iii) helps understand the recently documented decline in business dynamism by showing a disappearance of high-growth startups ("gazelles") since the mid-1980s.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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(Preview, Version of record, pdf, 1.1MB, Terms of use)
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- Publisher copy:
- 10.1257/aer.20190748
Authors
- Publisher:
- American Economic Association
- Journal:
- American Economic Review More from this journal
- Volume:
- 111
- Issue:
- 2
- Pages:
- 547-579
- Publication date:
- 2021-01-28
- Acceptance date:
- 2020-10-12
- DOI:
- ISSN:
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0002-8282
- Language:
-
English
- Keywords:
- Pubs id:
-
1137313
- Local pid:
-
pubs:1137313
- Deposit date:
-
2020-10-12
- ARK identifier:
Terms of use
- Copyright holder:
- American Economic Association
- Copyright date:
- 2021
- Rights statement:
- © 2021 American Economic Association. All rights reserved.
- Notes:
- This is the publisher's version of the article. The final version is available online from American the Economic Association at: https://doi.org/10.1257/aer.20190748
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