Firm Age, Investment Opportunities, and Job Creation

73 Pages Posted: 7 Jan 2014 Last revised: 28 Jul 2016

Manuel Adelino

Duke University; Duke Innovation & Entrepreneurship Initiative; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Song Ma

Yale School of Management

David T. Robinson

Fuqua School of Business, Duke University; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Multiple version iconThere are 2 versions of this paper

Date Written: July 27, 2016

Abstract

New firms are an important source of job creation, but the underlying economic mechanisms for why this is so are not well understood. Using an identification strategy that links shocks to local income to job creation in the non-tradable sector, we ask whether job creation arises more through the new firm creation or through the expansion of existing firms. We find that new firms account for the bulk of net employment creation in response to local investment opportunities. There is also significant gross job creation and destruction by existing firms, suggesting that positive local shocks accelerate churn.

Suggested Citation

Adelino, Manuel and Ma, Song and Robinson, David T., Firm Age, Investment Opportunities, and Job Creation (July 27, 2016). Journal of Finance, Forthcoming; Duke I&E Research Paper No. 16-5. Available at SSRN: https://ssrn.com/abstract=2375173 or http://dx.doi.org/10.2139/ssrn.2375173

Duke Innovation & Entrepreneurship Initiative ( email )

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Durham, NC 27701
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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Song Ma

Yale School of Management ( email )

165 Whitney Ave
P.O. Box 208200
New Haven, CT 06511
United States

HOME PAGE: http://faculty.som.yale.edu/songma/

David T. Robinson

Fuqua School of Business, Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0120
United States
919-660-8023 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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