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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

Young firms disproportionately employ young workers, controlling for firm size, industry, geography and time. The same positive correlation between young firms and young employees holds when we look just at new hires. On average, young employees in young firms earn higher wages than young employees in older firms. Further, young employees disproportionately join young firms with greater innovation potential and that exhibit higher growth, conditional on survival. These facts are consistent with the argument that the skills, risk tolerance, and career dynamics of young workers are contributing factors to their disproportionate share of employment in young firms. Finally, we show that an increase in the regional supply of young workers is positively related to the rate of new firm creation, especially in high tech industries, suggesting a causal link between the supply of young workers and new firm creation.

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Bibliographic Info

Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2013-75.

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Date of creation: 2013
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Handle: RePEc:fip:fedgfe:2013-75

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Cited by:
  1. Bengtsson, Ola & Hand, John R. M., 2012. "Employee Compensation in Entrepreneurial Companies," Working Paper Series 922, Research Institute of Industrial Economics.
  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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