NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Firm Age, Investment Opportunities, and Job Creation

Manuel Adelino, Song Ma, David T. Robinson

NBER Working Paper No. 19845
Issued in January 2014
NBER Program(s):   CF   PR

This paper asks whether startups react more to changing investment opportunities than more mature firms do. We use the fact that a region's pre-existing industrial structure creates exogenous variation in the severity of its exposure to nation-wide manufacturing shocks to develop an instrument for changing investment opportunities, and examine employment creation in the non-tradable sector as a response to those opportunities. Startups are much more responsive to changing local economic conditions than older firms. Moreover, their responsiveness doubles in areas with better access to small business finance, suggesting that financing constraints are an important brake on job creation in the startup sector. Although we focus mostly on the non-tradable sector for empirical identification, our results extend to other sectors of the economy, indicating that the mechanisms we uncover are economically pervasive. This suggests that factors like organizational flexibility and innovativeness may be important drivers of job creation among startups.

download in pdf format
   (317 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19845

Users who downloaded this paper also downloaded these:
Fort, Haltiwanger, Jarmin, and Miranda w19134 How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size
Lafontaine and Shaw w20312 Serial Entrepreneurship: Learning by Doing?
Acemoglu, Autor, Dorn, Hanson, and Price w19837 Return of the Solow Paradox? IT, Productivity, and Employment in U.S. Manufacturing
Ellison, Glaeser, and Kerr w13068 What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns
Czarnitzki, Hall, and Hottenrott w19947 Patents as Quality Signals? The Implications for Financing Constraints on R&D
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us