THE RELATIONSHIP BETWEEN THE ESTABLISHMENT AGE DISTRIBUTION AND URBAN GROWTH*

ABSTRACT This paper explores the relationship between urban growth and establishment‐level dynamics through geographic variations in the establishment age distribution. Using administrative microdata, I find that faster growing cities have higher rates of entry and exit, and younger establishments, on average. The resulting differences in the age distribution account for 38 percent of the variation in MSA employment growth, leaving the majority due to differences among establishments of the same age. In particular, entry and the growth and survival of young establishments (aged five years or less) account for the majority of the variation in MSA growth.