Entrepreneurship and Job Creation
34 Pages Posted: 10 Mar 2015 Last revised: 1 Feb 2016
Date Written: December 2015
Using a dataset with over 24 million observations and more than 230,000 entries into entrepreneurship we analyze the gross (including the founders), net (excluding the founders), and new (jobs to the former unemployed or those outside the labor force) job creation by entrepreneurs two and six years after start-up. We show that the average entrepreneur does not create any jobs for any other than him/her-self, and that the average entrepreneur typically arrives from having another job so that even for him/her-self there is no new job created but simply a reshuffling of jobs from older to new firms. We further show that incorporation status is by far the most important correlate of job creation. High-ability individuals are more likely to form incorporated ventures and individuals with low ability are more likely to start sole proprietorships.
Keywords: Entrepreneurship, incorporation, job creation, occupational choice, self-employment, stars and misfits
JEL Classification: L26, J24
Suggested Citation: Suggested Citation