MACRO: Technifying Ventures; Professor Jeremy Greenwood (University of Pennsylvania)

Abstract: 

The adoption of advanced technologies has important implications for employment and growth. Advanced technologies are often embraced by innovative startups, which are commonly funded by venture capital. Stylized facts are compiled, using US Census data, regarding the adoption of advanced technologies by startups and the source of funding that a startup draws upon. The relationship between technology adoption and the source of funding, on the one hand, and short- and longer-run employment and output, on the other, is studied. A model of startups is then constructed featuring decisions about technology adoption and whether venture capital funding is used. The model is matched up with Census facts about startups, employment, technology adoption, and the funding source. The implications of business taxation and subsidies for startups are examined.

Click here to view paper.