How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size
Tuck School of Business at Dartmouth
University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
Ron S. Jarmin
U.S. Census Bureau
U.S. Census Bureau - Center for Economic Studies
June 12, 2013
US Census Bureau Center for Economic Studies Paper No. CES-WP- 13-30
There remains considerable debate in the theoretical and empirical literature about the differences in the cyclical dynamics of firms by firm size. This paper contributes to the debate in two ways. First, the key distinction between firm size and firm age is introduced. The evidence presented in this paper shows that young businesses (that are typically small) exhibit very different cyclical dynamics than small/older businesses. The second contribution is to present evidence and explore explanations for the finding that young/small businesses were hit especially hard in the Great Recession. The collapse in housing prices accounts for a significant part of the large decline of young/small businesses in the Great Recession.
Number of Pages in PDF File: 77
Date posted: June 13, 2013
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