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Who Works for Startups? The Relation between Firm Age, Employee Age, and Growth

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  • Paige Ouimet
  • Rebecca Zarutskie

Abstract

We present evidence that young employees are an important ingredient in the creation and growth of firms. Our results suggest that young employees possess attributes or skills, such as willingness to take risk or innovativeness, which make them relatively more valuable in young, high growth, firms. Young firms disproportionately hire young employees, controlling for firm size, industry, geography and time. Young employees in young firms command higher wages than young employees in older firms and earn wages that are relatively more equal to older employees within the same firm. Moreover, young employees disproportionately join young firms that subsequently exhibit higher growth and raise venture capital financing. Finally, we show that an increase in the regional supply of young workers increases the rate of new firm creation. Our results are relevant for investors and executives in young, high growth, firms, as well as policymakers interested in fostering entrepreneurship.

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File URL: ftp://ftp2.census.gov/ces/wp/2011/CES-WP-11-31.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 11-31.

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Length: 43 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:cen:wpaper:11-31

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Cited by:
  1. Ola Bengtsson & John R. M. Hand, 2013. "Employee Compensation in Entrepreneurial Companies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(2), pages 312-340, 06.
  2. Paige Ouimet & Rebecca Zarutskie, 2011. "Acquiring Labor," Working Papers 11-32, Center for Economic Studies, U.S. Census Bureau.
  3. Nyström, Kristina & Elvung, Gulzat Zhetibaeva, 2013. "New firms and labor market entrants: Is there a wage penalty for employment in new firms?," Working Paper Series in Economics and Institutions of Innovation 319, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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