Where Are the Start-Ups? Loss of Dynamism Is Impeding Growth
Start-up and shutdown rates among
all United States companies
Companies starting up
Companies shutting down
Start-ups as a share of all companies
The evidence paints a distinct picture of decline: Fewer start-ups mean fewer new ideas
and fewer young, productive businesses to replace older, less productive ones.
The pattern is particularly striking in the United States, where the share of adults with a job remains well below its peak at the end of the 20th century,
and productivity growth has trundled along over the last decade at the slowest pace since the end of World War II.
Most notably, the economy’s ability to generate and support new businesses — agents of creative destruction
that bring new products and methods into the marketplace — appears to be faltering across the world.
But labor market fluidity — job switching, creation and destruction — has been declining since the 1980s.
Researchers have found that the decline in companies entering the market since 1980 has trimmed productivity growth by about 3.1 percent.
