As prior research has shown, the age and size of a business are important characteristics that may reflect its potential to create jobs and economic growth.
The BDS allows us to distinguish between the age and size of an establishment (a physical place of work) and the age and size of the firm (the larger enterprise that owns and operates the establishment).
Firm age is defined as the age of the oldest establishment in the first year in which a firm has employees. We define a startup as any firm that employed its first worker in the current year.
New establishments created by new firms will have job creation patterns that resemble other startups. But new establishments created by long-existing firms will grow in ways that reflect the trends of mature firms.
In addition, an establishment that belongs to a larger parent company may act differently than an independent establishment.
For the purposes of this article, we focus on two age categories: young and old. Young firms are those with positive employment for five years or less, and old firms are those with positive employment for more than five years.
A firm’s size is based on the first-quarter employment of a given year and includes all establishments associated with the firm at that time. We consider firms with 100 or more employees “large,” and those with fewer than 100 employees “small.”