Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/210740 
Year of Publication: 
2019
Series/Report no.: 
Staff Report No. 888
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We propose a simple explanation for the long-run decline in the startup rate. It was caused by a slowdown in labor supply growth since the late 1970s, largely pre-determined by demographics. This channel explains roughly two-thirds of the decline and why incumbent firm survival and average growth over the lifecycle have been little changed. We show these results in a standard model of firm dynamics and test the mechanism using shocks to labor supply growth across states. Finally, we show a longer startup rate series, imputed using historical establishment tabulations, that rises over the 1960-70s period of accelerating labor force growth.
Subjects: 
firm dynamics
demographics
business dynamism
macroeconomics
JEL: 
D22
E24
J11
Document Type: 
Working Paper

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