2020/20 | LEM Working Paper Series | |
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The age distribution of business firms |
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Flavio Calvino, Daniele Giachini and Mattia Guerini |
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Keywords | ||
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Firm demographics; age distribution; business dynamism.
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JEL Classifications | ||
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L11, L22, M13, M21
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Abstract | ||
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We investigate upon the shape and the determinants of the age distribution of business firms. By
employing a novel dataset covering the population of French businesses, we highlight that a geometric law
provides a reasonable approximation for the age distribution. However, relevant systematic deviations
and sectoral heterogeneity appear. We develop a stochastic model of firm dynamics to explain the
mechanisms behind this evidence and relate them to business dynamism. Results reveal a long-term decline in
entry rates and lower survival probabilities of young firms. Our findings bear important implications for
aggregate outcomes, notably employment growth.
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