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High Growth Young Firms: Contribution to Job, Output, and Productivity Growth

In: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges

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  • John Haltiwanger
  • Ron S. Jarmin
  • Robert Kulick
  • Javier Miranda

Abstract

Recent research shows that the job creating prowess of small firms in the U.S. is better attributed to startups and young firms that are small. But most startups and young firms either fail or don’t create jobs. A small proportion of young firms grow rapidly and they account for the long lasting contribution of startups to job growth. High growth firms are not well understood in terms of either theory or evidence. Although the evidence of their role in job creation is mounting, little is known about their life cycle dynamics, or their contribution to other key outcomes such as real output growth and productivity. In this paper, we enhance the Longitudinal Business Database with gross output (real revenue) measures. We find that the patterns for high output growth firms largely mimic those for high employment growth firms. High growth output firms are disproportionately young and make disproportionate contributions to output and productivity growth. The share of activity accounted for by high growth output and employment firms varies substantially across industries - in the post 2000 period the share of activity accounted for by high growth firms is significantly higher in the High Tech and Energy related industries. A firm in a small business intensive industry is less likely to be a high output growth firm but small business intensive industries don’t have significantly smaller shares of either employment or output activity accounted for by high growth firms.
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Suggested Citation

  • John Haltiwanger & Ron S. Jarmin & Robert Kulick & Javier Miranda, 2016. "High Growth Young Firms: Contribution to Job, Output, and Productivity Growth," NBER Chapters,in: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, pages 11-62 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:13492
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Henrekson, Magnus & Sanandaji, Tino, 2017. "Schumpeterian Entrepreneurship in Europe Compared to Other Industrialized Regions," Working Paper Series 1170, Research Institute of Industrial Economics, revised 29 Jun 2018.
    2. Andreas Menzel, 2017. "Knowledge Exchange and Productivity Spill-overs in Bangladeshi Garment Factories," CERGE-EI Working Papers wp607, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. repec:eee:moneco:v:93:y:2018:i:c:p:68-85 is not listed on IDEAS
    4. Benjamin W. Pugsley & Petr Sedlacek & Vincent Sterk, 2017. "The Nature of Firm Growth," Discussion Papers 1737, Centre for Macroeconomics (CFM).
    5. repec:vrs:notajo:v:2017:y:2017:i:1:p:26-46:n:2 is not listed on IDEAS
    6. Titan Alon & David Berger & Robert Dent & Benjamin Pugsley, 2017. "Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth," NBER Working Papers 23875, National Bureau of Economic Research, Inc.
    7. Michel Dumont & Chantal Kegels, 2016. "Working Paper 06-16 - Young Firms and Industry Dynamics in Belgium," Working Papers 1606, Federal Planning Bureau, Belgium.
    8. repec:eee:ecolet:v:164:y:2018:i:c:p:50-57 is not listed on IDEAS
    9. Maliranta, Mika & Nurmi, Satu, 2016. "Business Owners, Employees and Firm Performance," ETLA Working Papers 42, The Research Institute of the Finnish Economy.
    10. Ryan A. Decker & John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2017. "Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown," CARRA Working Papers 2017-02, Center for Economic Studies, U.S. Census Bureau.
    11. Thomas Farole & Yoonyoung Cho, 2017. "Bangladesh Jobs Diagnostic," World Bank Other Operational Studies 28498, The World Bank.
    12. repec:nbr:nberch:13889 is not listed on IDEAS
    13. Lucia Foster & Cheryl Grim & John Haltiwanger & Zoltan Wolf, 2018. "Innovation, Productivity Dispersion, and Productivity Growth," NBER Chapters,in: Measuring and Accounting for Innovation in the 21st Century National Bureau of Economic Research, Inc.
    14. Emilien Gouin-Bonenfant, 2018. "Productivity Dispersion, Between-firm Competition and the Labor Share," 2018 Meeting Papers 1171, Society for Economic Dynamics.
    15. repec:boe:qbullt:0212 is not listed on IDEAS
    16. Ryan A. Decker & John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2017. "Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 107(5), pages 322-326, May.
    17. Chen Yeh, 2017. "Are firm-level idiosyncratic shocks important for U.S. aggregate volatility?," Working Papers 17-23, Center for Economic Studies, U.S. Census Bureau.
    18. Heyman, Fredrik & Norbäck, Pehr-Johan & Persson, Lars, 2018. "Who creates jobs and who creates productivity? Small versus large versus young versus old," Economics Letters, Elsevier, vol. 164(C), pages 50-57.
    19. Murmann, Martin, 2017. "The Growth and Human Capital Structure of New Firms over the Business Cycle," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168290, Verein für Socialpolitik / German Economic Association.
    20. Ursel Baumann & Melina Vasardani, 2016. "The slowdown in US productivity growth - what explains it and will it persist?," Working Papers 215, Bank of Greece.
    21. Henrekson Magnus, 2017. "Taxation of Swedish Firm Owners: The Great Reversal from the 1970s to the 2010s," Nordic Tax Journal, Sciendo, vol. 2017(1), pages 26-46, January.
    22. Chen Yeh, 2016. "Are firm-level idiosyncratic shocks important for U.S. aggregate volatility?," Working Papers 16-47, Center for Economic Studies, U.S. Census Bureau.

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