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Working Paper
High-growth firms in Georgia
This paper reports the results of a study of the characteristics and direct employment impact of high-growth firms operating in Georgia. The longitudinal data used in this study are from the National Establishment Time-Series (NETS) database. Using a standard definition of high employment growth to classify firms, we track the direct employment contribution of high-growth firms in the state from 1989 to 2009. We find that only a small fraction of firms satisfied the high-growth employment criteria in any year, but these rapidly growing firms made a disproportionately large contribution to ...
Working Paper
The Effect of Immigration on Business Dynamics and Employment
Immigration, like any positive labor supply shock, should increase the return to capital and spur business investment. These changes should have a positive impact on business creation and expansion, particularly in areas that receive large immigrant inflows. Despite this clear prediction, there is sparse empirical evidence on the effect of immigration on business dynamics. One reason may be data unavailability since public-access firm-level data are rare. This study examines the impact of immigration on business dynamics and employment by combining U.S. data on immigrant inflows from the ...
Working Paper
Firm Entry and Macroeconomic Dynamics: A State-level Analysis
Using an annual panel of US states over the period 1982-2014, we estimate the response of macroeconomic variables to a shock to the number of new firms (startups). We find that these shocks have significant effects that persist for many years on real GDP, productivity, and population. This result is consistent with simple models of firm dynamics where a ?missing generation? of firms affects productivity persistently.
Briefing
Secular Trends in Macroeconomics and Firm Dynamics: A Conference Recap
How does declining population growth affect firm dynamics? Is income growth volatility decreasing in the U.S.? How do changes in housing prices affect young businesses? Have investments in artificial intelligence improved productivity? These were among the questions addressed by economists during a recent Richmond Fed research conference.
Working Paper
Boom Town Business Dynamics
The shale oil and gas boom in the U.S. provides a unique opportunity to study economic growth in a "boom town" environment, to derive insights about economic expansions more generally, and to obtain clean identification of the causal effects of economic growth on specific margins of business adjustment. The creation of new business establishments--separate from the expansion of existing establishments--accounts for a disproportionate share of the multi-industry employment growth sparked by the shale boom, an intuitive but not inevitable empirical result that is broadly consistent with ...
Working Paper
Entry, Variable Markups, and Business Cycles
The creation of new businesses declines in recessions. In this paper, I study the effects of pro-cyclical business formation on aggregate employment in a general equilibrium model of firm dynamics. The key features of the model are that the elasticity of demand faced by firms falls with their market share and that adjustment costs slow the reallocation of employment between firms. In response to a decline in entry, incumbent firms' market shares increase, their elasticity of demand falls, and they increase their markups and reduce employment. To quantify the model, I study the relationship ...
Journal Article
Interview: Steven Davis
As a student at Central Catholic High School in Portland, Ore., in the mid-1970s, Steven Davis took an elective course on economics that piqued his interest. When he went on to college at Portland State University, he initially picked economics as his major but figured he might switch to sociology or international relations. In the end, however, economics won out. "Those fields struck me as interesting," he says, "but economics seemed to offer a more useful set of tools for understanding social and economic issues."