Fact of the Week: The Productivity Gap Among Tech Start-Ups Widened 12 Percent From 1997 to 2013

John Wu May 21, 2018
May 21, 2018

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Better economic programs may be providing newer technology-based start-ups an important edge to succeed and scale much better than their counterparts in previous years. Start-up incubators and accelerators, better managed venture capital funds, and expanded government policies targeting tech start-ups are examples of these economic programs.

New economic research from the National Bureau of Economic Research show that from 1997 to 2013, productivity dispersion has widened across tech start-ups (firms aged less than 6 years in industries with a large share of STEM-trained employees). Specifically, when arranging all tech start-ups by their productivity levels, the difference in productivity for the 25th percentile start-up and 75th percentile start-up increased by 12 percent from 1997 to 2013. This is great for the tech ecosystem as new start-ups are far outperforming their competition.