Estimating Entrepreneurial Jobs: Business Creation is Job Creation
January 8, 2011
American Economic Association Annual Meeting, 2011
This paper distinguishes two kinds of jobs in the process of business creation. One is the "employment job" offered by an employer to an employee through a contractual (paid) relationship. The other is the "entrepreneurial job" created by active business owners for themselves. Only a small proportion of salaried entrepreneurial jobs are included in official employment statistics. To estimate the scale of entrepreneurial jobs, this paper examines mainly three databases - the Panel Study of Entrepreneurial Dynamics (PSED), the Kauffman Firm Survey (KFS), and the 2002 Survey of Business Owners (SBO) - of all three they provide information in detail of both employment and business owners. In 2002, an average of 5.8 jobs (4.4 employment jobs and 1.4 entrepreneurial jobs) created by a startup employer firm and an average of 1.2 entrepreneurial jobs by a startup non-employer firm. At the same time, each of the entrepreneurial job takers contributed an average of 33.1 labor hours per week to their start-up firms. It estimates that at least 2.5 million people created their own entrepreneurial jobs every year between 1997 and 2008, in addition to creating more than one million paid employment jobs. The paper concludes that business creation is job creation; and recommends that job statistics should include entrepreneurial jobs. To encourage job creation, policymakers need to recognize that startup business owners are creators of jobs for others, but most importantly, for themselves.
Number of Pages in PDF File: 19
Keywords: business creation, job creation, entrepreneurial jobs, employment, macroeconomy
JEL Classification: L26, M13, J2
Date posted: February 12, 2011