An Aging Dynamo: Demographic Change and the Decline of Entrepreneurial Activity in the United States (Job Market Paper)

The rate of new business startups has fallen drastically over the last thirty-five years, accelerating greatly since the year 2000. Other measures of business dynamism such as the job reallocation rate are consistent with this trend, raising serious concern given the importance that young, high-growth firms have on employment. The timing of this decline coincides with the start of a steady increase in both the life expectancy and average age of the workforce. I document an individual's propensity to select into entrepreneurship follows a `hump shape' as they age. To account for both individual behavior and aggregate trends, I construct a life cycle model of entrepreneurial choice, studying a number of channels that link demographic forces to entrepreneurial selection. I find that demographic channels can account for a large portion of the recent decline in startup activity. This model predicts that entrepreneurial activity will continue to decline as the pool of potential entrepreneurs continue to age. I conclude with a discussion of the potential policy tools that will affect individual's life cycle risk attitudes and the predicted effects that such measures will have on the rate of new business startups.  

Less Perfect Unions: Average Treatment Effects of Currency Unions and the EMU on Trade Over Time

Estimating the currency union effect on trade has been a contentious topic, with a wide range of estimates  on the true size of gains. One fundamental issue underlying many estimates is the lack of a accurate control group against which to compare outcomes, making it hard to understand the degree to which makes existing estimates even harder to interpret from the perspective of policy makers. Estimates of gains within the eurozone tend to be smaller, while the sovereign debt crisis in Europe caused many to question the long term viability of the union. It is crucial for the public debate over the costs and benefits of eurozone membership to bring more clarity to our understanding of the benefits from trade that such a union provides to its members.  I propose a novel approach to this literature that applies inverse propensity score weighting as well as local projections to study both the traditional static estimates of trade as well as forecasts of the effect of currency unions on trade over time. I find that the static effect of currency unions on trade are in general still quite large for currency unions in general, but quite small for the emu. However, I find the puzzling result that the currency union effect on trade for the euro declined over the period from implementation until the recession in 2008. Since the expected effect should be fixed over time this suggests a deeper understanding of the simultaneous policy changes that take place over the period that may bias static effects upwards. 

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© 2017 by Joseph Kopecky

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