The age distribution of business firms

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 deviat...

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Bibliographic Details
Published in:Journal of evolutionary economics 2022, Vol.32 (1), p.205-245
Main Authors: Calvino, Flavio, Giachini, Daniele, Guerini, Mattia
Format: Article
Language:English
Subjects:
Age
Age distribution
Approximation
Companies
Economic Growth
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Employment
Entrepreneurship
Exports
Innovations
Institutional/Evolutionary Economics
Job creation
Microeconomics
R & D/Technology Policy
Regular Article
Stochastic models
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Summary: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.
ISSN:0936-9937
1432-1386
DOI:10.1007/s00191-021-00747-2