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High-Growth Young Firms

High-Growth Young Firms

Contribution to Job, Output, and Productivity Growth

(p.11) 1 High-Growth Young Firms
Measuring Entrepreneurial Businesses
John John HaltiwangerRon S. JarminRobert KulickJavier Miranda
University of Chicago Press

Research shows job creation by small firms in the U.S. is attributable to start-ups and young firms, but most of these fail or don’t create jobs. A small proportion of young firms grows rapidly and accounts for the long-lasting contribution of start-ups to job growth. High growth firms are not well understood, and little is known about their life cycle dynamics, or their contribution to other key outcomes such as real output growth and productivity. In this chapter, we enhance the Longitudinal Business Database with gross output (real revenue) measures and find that patterns for high output growth firms largely mimic those for high employment growth firms. High growth output firms are disproportionately young and make disproportionate contributions to output and productivity growth. The share of activity accounted for by high growth output and employment firms varies substantially across industries—in the post-2000 period high growth firms’ share of activity is significantly higher in the high tech and energy related industries. A firm in a small business intensive industry is less likely to have high output growth but small business intensive industries don’t have significantly smaller shares of either employment or output activity accounted for by high growth firms.

Keywords:   high growth entrepreneurs, job creation, output, productivity growth

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