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How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size

77 Pages Posted: 13 Jun 2013  

Teresa Fort

Tuck School of Business at Dartmouth

John Haltiwanger

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

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications

Multiple version iconThere are 3 versions of this paper

Date Written: June 12, 2013

Abstract

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.

Suggested Citation

Fort, Teresa and Haltiwanger, John and Jarmin, Ron S. and Miranda, Javier, How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size (June 12, 2013). US Census Bureau Center for Economic Studies Paper No. CES-WP- 13-30. Available at SSRN: https://ssrn.com/abstract=2278454 or http://dx.doi.org/10.2139/ssrn.2278454

Teresa C. Fort (Contact Author)

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States

John C. Haltiwanger

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3504 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Ron S. Jarmin

U.S. Census Bureau ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

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