High Tech Business Entry in the Pandemic Era

Authors

Ryan Decker, John Haltiwanger

September 3, 2024

FEDERAL RESERVE RESEARCH: Board of Governors

The COVID-19 pandemic and its aftermath have featured a surge in business entry (Decker and Haltiwanger 2024). A natural question is whether the elevated entry seen in recent years will have positive implications for aggregate productivity growth given the historically important role of business entry for productivity dynamics (Decker et al. 2014, Alon et al. 2018). A closely related question is whether the recent entry surge featured strong high tech entry, since high tech industries have been important for historical productivity fluctuations (Fernald 2015). Indeed, the high tech industries that contributed most to the strong productivity growth of the mid-1990s through the early 2000s had seen an earlier surge in firm entry during the early 1990s (Foster et al. 2021). In this note, we show that high tech industries made a large, disproportionate contribution to the aggregate net establishment entry surge after 2019.

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