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Great Recession Babies: How Are Startups Shaped by Macro Conditions at Birth?

Author

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  • Bias, Daniel
  • Ljungqvist, Alexander

Abstract

We combine novel micro data with the quasi-random timing of patent decisions over the business cycle to estimate the effects of being born in the Great Recession on innovative startups. After purging ubiquitous selection biases and sorting effects, we find that recession startups experience better long-term outcomes in terms of employment and sales growth (both driven by lower mortality) and future inventiveness. While funding conditions cannot explain differences in outcomes, a labor market channel can: recession startups are better able to retain their founding inventors and build productive R\&D teams around them.

Suggested Citation

  • Bias, Daniel & Ljungqvist, Alexander, 2023. "Great Recession Babies: How Are Startups Shaped by Macro Conditions at Birth?," CEPR Discussion Papers 18442, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18442
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    More about this item

    Keywords

    Startups; Innovation; Patents;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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