According to "Turmoil and Growth: Young Businesses, Economic Churning and Productivity Gains," new and growing businesses create millions of jobs each year. At the same time, exiting and declining businesses destroy millions of jobs. The study, conducted by researchers from the University of Chicago, University of Maryland and the U.S. Census Bureau, points out that the contribution of new businesses extends beyond initial entry, with surviving businesses having very rapid employment growth in their early years.
The report's analysis of productivity data shows that young businesses have higher productivity levels and faster productivity gains than more mature businesses, particularly in the early years. In effect, the churning process replaces lower productivity businesses with new, more productive ones, thereby increasing productivity and raising living standards.