Entrepreneurship and Job Growth

39 Pages Posted: 4 Sep 2008

See all articles by John Haltiwanger

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Date Written: October 1, 2006

Abstract

This analysis attempts to place existing research about job growth among young, small firms in the context of productivity dynamics. Most research to date has relied on U.S. manufacturing data; this study, however, takes advantage of tabulations from recent, economy-wide datasets.

These datasets use the Longitudinal Business Database (LBD) and the Integrated LBD, which is an extended version of the LBD. Both datasets incorporate the role of non-employer businesses (i.e. businesses that do not yet employ workers) into the job growth dynamics of U.S. businesses.

A review and analysis of the job growth literature from a productivity dynamics perspective reveals that young businesses have much higher net growth and much higher volatility than mature firms. The data also indicate that publicly traded firms exhibit higher net growth and less volatility than privately held businesses and that there has been a decline in overall firm volatility in the U.S. over the last couple of decades.

Finally, a significant fraction of young employer firms have a pre-history as non-employer firms. As a whole, the findings suggest that U.S. business dynamics are characterized by constant change and that young firms exhibit rapid net growth and high volatility.

Keywords: Startups, Job creation, Market volatility, Firm growth, Firm age, Private firms, Public firms, Firm size, Nonemployer firms, Business conditions

Suggested Citation

Haltiwanger, John C., Entrepreneurship and Job Growth (October 1, 2006). Available at SSRN: https://ssrn.com/abstract=1244668 or http://dx.doi.org/10.2139/ssrn.1244668

John C. Haltiwanger (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3504 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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