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Firm Dynamics, Persistent Effects of Entry Conditions, and Business Cycles

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  • Sara Moreira

Abstract

This paper examines how the state of the economy when businesses begin operations affects their size and performance over the lifecycle. Using micro-level data that covers the entire universe of businesses operating in the U.S. since the late 1970s, I provide new evidence that businesses born in downturns start on a smaller scale and remain smaller over their entire lifecycle. In fact, I find no evidence that these differences attenuate even long after entry. Using new data on the productivity and composition of startup businesses, I show that this persistence is related to selection at entry and demand-side channels.

Suggested Citation

  • Sara Moreira, 2017. "Firm Dynamics, Persistent Effects of Entry Conditions, and Business Cycles," Working Papers 17-29, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:17-29
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    File URL: https://www2.census.gov/ces/wp/2017/CES-WP-17-29.pdf
    File Function: First version, 2017
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    References listed on IDEAS

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    Cited by:

    1. E. Mark Curtis & Ryan Decker, 2018. "Entrepreneurship and State Taxation," Finance and Economics Discussion Series 2018-003, Board of Governors of the Federal Reserve System (US).
    2. Aubhik Khan & Julia Thomas & Tatsuro Senga, 2018. "The Persistent Effects of Entry and Exit," 2018 Meeting Papers 707, Society for Economic Dynamics.

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