Quality over Quantity: Reexamining the Link between Entrepreneurship and Job Creation

Abstract

While much has been written on the quantity of jobs created by entrepreneurs, scholars have yet to examine the quality of these jobs. This paper begins to fill this gap by examining nearly 5,000 businesses that began operations in 2004. We investigate the extent to which nascent employers provide what many think of as a quality jobs — those offering healthcare coverage and a retirement plan. Not surprisingly, we find that due to their small scale, constrained resources, and protection from institutional pressures, start-ups do not provide their employees with either of these proxies for job quality and that their likelihood of offering health or retirement benefits increases only marginally over their first six years of operation. The finding that entrepreneurs’ impressive record of job creation is not matched by a similarly impressive outcome with respect to job quality challenges policymakers to ensure that entrepreneurs are encouraged to create quality employment opportunities in the course of their creating new businesses.

Keywords: job creation, job quality, entrepreneurship, employment relations

JEL Classification: M13, J58, J32, M12, M52