MACRO: Dr Benjamin Pugsley (University of Notre Dame)

Superstar Firms through the Generations 

We present new facts about the largest American companies over the past century. In manufacturing, top firms in the 1910s, 1950s, and 2010s predominantly date back to around 1900. Even as this special generation persists, turnover among top firms is substantial. In contrast, in retail wholesale trade, we do not observe a special generation among the top firms. We show in a model of firm dynamics that a special generation can arise from an industrial revolution through the adoption of a scalable technology and learning-by-doing. Top firm turnover is matched by standard idiosyncratic productivity shocks. In trade, learning-by-doing appears weak, making a special generation harder to sustain. Our results highlight the potential for lasting nonstationarity among the dynamics of top firms, which can result from the long echoes of technological change. The special generation also defines a limited window of opportunity for entrepreneurs and policymakers aiming to build top firms.