Employment effects of business dynamics:Mice, Gazelles and Elephants

This paper examines the relationship between business dynamics and employmenteffects in 320 U.S. Metropolitan Statistical Areas (MSA). Much of the theoretical workon industry dynamics focuses on the role of noisy selection and incomplete informationon entry and survival. We extend this research by looking at the impact of firmheterogeneity on employment persistence. We find that only start-ups with greater thantwenty employees have persistent employment effects over time and only in largediversified metropolitan regions. Therefore, both the type of entry and thecharacteristics of the region are important for employment growth...