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Startups and employment following the COVID-19 pandemic: a calculator

Benedetti-Fasil, Cristiana; Sedlacek, Petr; Sterk, Vincent; (2022) Startups and employment following the COVID-19 pandemic: a calculator. Economic Policy , 37 (111) pp. 570-533. 10.1093/epolic/eiac028. Green open access

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Abstract

Early indicators suggest that startup activity across countries is heavily affected by the COVID-19 pandemic and the associated lockdowns. At the same time, empirical evidence has shown that such disturbances may have long-lasting effects on aggregate employment. This paper presents a calculator which can be used to compute these effects under different scenarios regarding (i) the number of startups, (ii) the growth potential of startups and (iii) the survival rate of young firms. We apply our calculator to the United States and four European countries: France, Germany, Italy and Spain. We find that employment losses can be substantial and last for more than a decade, even when the assumed slump in startup activity is only short-lived. Almost half of the long-run losses is caused by fewer high-growth firms, ‘gazelles’, starting up during the pandemic. Our results also suggest that the long-run effects of the pandemic may vary across countries substantially with Germany possibly being shielded due to its low business dynamism.

Type: Article
Title: Startups and employment following the COVID-19 pandemic: a calculator
Open access status: An open access version is available from UCL Discovery
DOI: 10.1093/epolic/eiac028
Publisher version: https://doi.org/10.1093/epolic/eiac028
Language: English
Additional information: This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10163432
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