Where do entrepreneurs come from? What makes technology-based startups tick? How do these nascent firms grow and scale in relation to their decisions around hiring, financing, and commercialization strategy?
My research draws from interesting phenomenon and theory at the intersection of entrepreneurship and labor economics. My dissertation research is generously funded by the Kauffman Foundation and supported by the US Census Bureau.
"Is There a Startup Wage Premium? Evidence from MIT Graduates"
Published in Research Policy
Link to Paper
Abstract: While startups are the center of extensive policy discussion given their outsized role in job creation, it is not clear whether they create high quality jobs relative to incumbent firms. This paper investigates the wage differential between venture capital-backed startups and established firms, given that the two firm types compete for talent. Using data on MIT graduates, I find that non-founder employees at VC-backed startups earn roughly 10% higher wages than their counterparts at established firms. To account for unobserved heterogeneity across workers, I exploit the fact that many MIT graduates receive multiple job offers. I find that wage differentials are statistically insignificant from zero when individual fixed effects are included. This implies that much of the startup wage premium in the cross-section can be attributed to selection, and that VC-backed startups pay competitive wages for talent. To unpack the selection mechanism, I show that individual preferences for risk as well as challenging work strongly predict entry into VC-backed startups.
"Age and High-Growth Entrepreneurship" (with Pierre Azoulay, Benjamin Jones, and Javier Miranda)
Stage: Working Paper
Abstract: Do young people make better entrepreneurs? Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. We use comprehensive administrative data at the U.S. Census Bureau to study the age distribution of founders of high-growth start-ups in the past decade. Our primary finding is that successful entrepreneurs are middle-aged, not young. The mean age for entrepreneurs in the U.S. is 41.9. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0. The findings are broadly similar when focusing on high-technology sectors, entrepreneurial hubs, and successful firm exits. Conditional on starting a firm, the founders’ probability of success is increasing substantially with age, peaking between age 45 and the late 50s.
"The Paradox of Startup M&A"
"Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact" (with Ed Roberts and Fiona Murray)
Link to 2015 Report: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2772695
Abstract: This report analyzes the economic impact of MIT alumni-founded companies and highlights the key trends in the MIT entrepreneurial ecosystem between 1950 and 2014. This study estimates that MIT alumni have launched more than 30,000 active companies that employ roughly 4.6 million people and generate $1.9 trillion in annual revenues, which is approximately the size of the world's 10th largest GDP.
"Just Passing Through: Characterizing U.S. Pass Through Business Owners" (with Nathan Goldschlag and Kristin McCue)
Abstract: We investigate the use of administrative data on the owners of partnerships and S-corporations to develop new statistics that characterize business owners. Income from these types of entities is "passed through" to owners to be taxed on the owners' tax returns. The information returns associated with such pass-through entities (Form K1 records) make it possible to link individual owners to the businesses they own. These linkages can be leveraged to associate measures of the demographic and human capital characteristics of business owners with the characteristics of the businesses they own. This paper describes measurement issues associated with administrative records on these pass-through entities and their integration with other Census data products. In addition, we document a number of interesting trends in business ownership among pass-through entities. We show a substantial decline in both entry and exit with less churn among both owners and owned businesses. We also show that the owners of pass-through entities are older, more likely to be male, and more likely to be white compared to the working population.