Abstract: Economic change and innovation are often embodied in young generationswho bring new ideas and transform the productive and organizational structureof companies.  What happens to an economyif the cohort of young people shrinks significantly in size? In this paper weexploit a sudden increase in emigration of young Italians during the period2010-2015 and analyze its effects on firm creation, local productivity andinnovation. As the emigration decision are themselves partly driven by localeconomic conditions, we isolate the “pull-driven” component in the wave ofmigrants to reduce endogeneity and omitted variable issues. We combine thisinformation with detailed firm-level data on the universe of Italian firms andfind that youth emigration is associated with lower firm creation, decline inskill intensity in the local economy and fewer innovative start-ups.