Staff Reports
The Role of Start-Ups in Structural Transformation
January 2016 Number 762
JEL classification: E24, J00, J23, L25

Authors: Robert C. Dent, Fatih Karahan, Benjamin Pugsley,
and Ayşegül Şahin

The U.S. economy has been going through a striking structural transformation—the secular reallocation of employment across sectors—over the past several decades. We propose a decomposition framework to assess the contributions of various margins of firm dynamics to this shift. Using firm-level data, we find that at least 50 percent of the adjustment has been taking place along the entry margin, owing to sectors receiving shares of start-up employment that differ from their overall employment shares. The rest is mostly the result of life cycle differences across sectors. Declining overall entry has a small but growing effect of dampening structural transformation.

Available only in PDF pdf 14 pages / 518 kb
Author disclosure statement(s)
E-mail Alerts
By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.   Close