Procrastination for October 5, 2017...

Should-Read: Nick Bunker: Old companies may be slowing down the U.S. economyh: "Titan Alon and David Berger... Robert Dent... and Benjamin Pugsley... labor productivity of firms over their lifecycles... http://equitablegrowth.org/equitablog/value-added/old-companies-may-be-slowing-down-the-u-s-economy/

...Young firms have significantly higher productivity growth and that this growth falls off very quickly. During the first year of business, brand new firms’ productivity grows by 15 percent on average. But that growth falls very quickly over the next few years and by the fifth year, the average productivity growth is essentially zero.... The largest factor behind the large productivity growth of young firms is reallocation of resources toward more productive firms, accounting for about two-thirds of productivity growth. The other one-third is due to selection, or the fact that less-productive companies are failing more than the more productive companies.... In 2014 if the startup rate had stayed at its 1980 level and if the distribution of companies hadn’t aged over the next 34 years... labor productivity would have been 3.1 percent higher in 2014 or, put differently, labor productivity would have been 0.1 percent higher each year over that period. Assuming that labor productivity increases are fully passed through to household income, median household income would have been about $1,600 higher under this situation...

Comments