Who Works for Startups? The Relation between Firm Age, Employee Age, and Growth
Paige Parker Ouimet
University of North Carolina at Chapel Hill
Federal Reserve Board
October 1, 2011
US Census Bureau Center for Economic Studies Paper No. CES-WP-11-31
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.
Number of Pages in PDF File: 43
Date posted: October 20, 2011
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