DP17400 Startup Types and Macroeconomic Performance in Europe
We construct a new and comprehensive data set on 1.3 million European startups. A cluster analysis identifies five distinct startup types that are consistently present across countries, industries, and cohorts. The initial differences between these startup types
are persistent and each type displays a characteristic life cycle in terms of productivity, employment, and survival. An agnostic firm dynamics model helps quantify how much structural policy could improve macroeconomic performance by shifting the composition of startup cohorts. We show that policies benefiting high-performance startups, while discouraging the entry of underperforming firms, can yield substantial gains in aggregate employment and productivity.