Flight to Safety: How Economic Downturns Affect Talent Flows to Startups

54 Pages Posted: 8 Oct 2020 Last revised: 12 Feb 2021

See all articles by Shai Bernstein

Shai Bernstein

Harvard Business School

Richard Townsend

University of California, San Diego (UCSD) - Rady School of Management

Ting Xu

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: February 11, 2021

Abstract

Using proprietary data from AngelList Talent, we study how individuals’ job search and application behavior changed during the COVID-19 downturn. We find that job seekers shifted their searches toward more established firms and away from early-stage startups, even within the same individual over time. Simultaneously, they broadened their other search parameters. Relative to more established firms, early-stage startups experienced a decline in applications, primarily driven by higher-quality candidates. These declines hold within a firm as well as within a job posting over time. Our findings uncover a flight to safety channel in the labor market, which may amplify the pro-cyclical nature of entrepreneurial activities.

Suggested Citation

Bernstein, Shai and Townsend, Richard and Xu, Ting, Flight to Safety: How Economic Downturns Affect Talent Flows to Startups (February 11, 2021). Available at SSRN: https://ssrn.com/abstract=3701394 or http://dx.doi.org/10.2139/ssrn.3701394

Shai Bernstein

Harvard Business School ( email )

Boston, MA 02163
United States

Richard Townsend

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Ting Xu (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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