Conference on Entrepreneurship and Economic Growth

Supported by the Ewing Marion Kauffman Foundation
Manuel Adelino and David T. Robinson Organizers
October 14-15, 2016

Entrepreneurship plays a significant role in the American economy. New firms contribute to job creation and stimulate innovation, and as a result, understanding trends in entrepreneurship is an important component for the study of economic growth.

The NBER, with support from the Ewing Marion Kauffman Foundation, held a conference on October 15-16, 2016, highlighting recent research on entrepreneurial activity. Papers presented included common themes relating to declining rates of startups and productivity growth, why and how people choose entrepreneurial paths, and the impact of policy on firms' decisions.

Researchers found that labor productivity at young firms grows substantially faster than at older firms, but that this effect decays quickly. Firms lose nearly two-thirds of the differential within five years of their founding, and are very similar to long-established firms after a decade. In another study, researchers concluded that, while the rate of firm births has declined, firms' potential for growth follows a cyclical pattern. Their measure of firm potential has risen since 2010.

Researchers also looked at how state policy affects startups, and found that minimum wage and corporate tax rate increases have a negative impact on startup employment growth, but that changes in personal tax rates have no effect. Other researchers found that a doubling of the number of immigrants from a particular country to a U.S. county increases the probability of a local U.S. firm and the origin country engaging in foreign direct investment by 4 percentage points.