Title: “Value without Employment”
Young firms’ contribution to aggregate employment has been underwhelming. However, a similar trend is not apparent in their contribution to aggregate sales or aggregate stock market capitalization. We study the implications of the arrival of “low marginal – high average” revenue-product-of-labor firms in a stylized model of dynamic firm heterogeneity, and show that the model can account for a large number of facts related to the decline in “business dynamism”. We study the long-term implications of the decline in business dynamism on the economy by providing analytical results that connect the decline in dynamism to the eventual decline of consumption.
Presenter: Simcha Barkai (London Business School)
Coauthors: Stavros Panageas (University of California, Los Angeles)
Discussant: Ryan Decker (Federal Reserve Board) and Simone Lenzu (New York University)