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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.

Suggested Citation

  • Paige Ouimet & Rebecca Zarutskie, 2013. "Who works for startups? The relation between firm age, employee age, and growth," Finance and Economics Discussion Series 2013-75, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfe:2013-75
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    References listed on IDEAS

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    Cited by:

    1. Lerner, Daniel A., 2016. "Behavioral disinhibition and nascent venturing: Relevance and initial effects on potential resource providers," Journal of Business Venturing, Elsevier, vol. 31(2), pages 234-252.
    2. Kristina Nyström & Gulzat Elvung, 2014. "New firms and labor market entrants: Is there a wage penalty for employment in new firms?," Small Business Economics, Springer, vol. 43(2), pages 399-410, August.
    3. 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, June.
    4. Paige Ouimet & Rebecca Zarutskie, 2011. "Acquiring Labor," Working Papers 11-32, Center for Economic Studies, U.S. Census Bureau.

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