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Who Works for Startups? The Relation between Firm Age, Employee Age, and Growth

43 Pages Posted: 20 Oct 2011  

Paige Ouimet

University of North Carolina at Chapel Hill

Rebecca Zarutskie

Federal Reserve Board

Multiple version iconThere are 3 versions of this paper

Date Written: October 1, 2011

Abstract

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.

Suggested Citation

Ouimet, Paige and Zarutskie, Rebecca, Who Works for Startups? The Relation between Firm Age, Employee Age, and Growth (October 1, 2011). US Census Bureau Center for Economic Studies Paper No. CES-WP-11-31. Available at SSRN: https://ssrn.com/abstract=1946788 or http://dx.doi.org/10.2139/ssrn.1946788

Paige Ouimet (Contact Author)

University of North Carolina at Chapel Hill ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Rebecca Zarutskie

Federal Reserve Board ( email )

20th Street and C Streets NW
Mailstop 155-B
Washington, DC 20551
United States
202-452-5292 (Phone)

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