Why Are Startups Important for the Economy?

Regarding the growth of startups that don't fail within five years of launching, the book chapter notes that, on average, firms that are 1 to 2 years old grow almost by three times as much (12 percent) as firms that are 3 to 4 years old. Secular Decline in U.S. Business Dynamism: Aggregate Impacts of Startups Startups comprise only a small portion of the total number of firms. February 2023, No. 23-06 Startups come in all shapes and sizes. In their counterfactual exercise (holding the economy's startup rate and firm age distribution constant at their 1980 values), the paper's authors find that aggregate productivity over the period 1980 to 2014 could have been 3.1 percent higher. [Extracted from the article]