Experimental Economics and Political Decision Making

In this paper we characterize firms’ lifetimes and their determinants. Unlike previous studies that use a cohort of new entrants with a short follow-up period, our dataset comprises a representative sample of the population of Spanish manufacturing firms in 1990, followed until 2000. The data were drawn from the annual survey Encuesta sobre Estrategias Empresariales. Our results suggest that firms’ exit risk increases up to about twenty years of age, then decreases to later rise (in line with “liability of adolescence and senescence”). Furthermore, large exporters that are not participated by foreign capital, performing advertising, making R&D (independently of the technological intensity of the industry) and with large price-cost margins and high productivity are expected to survive longer.