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

  • Paige Ouimet
  • Rebecca Zarutskie

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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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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