Gross, net, and new job creation by entrepreneurs

• Published in: Journal of Business Venturing Insights 2017-11, Vol.8, p.64-70
• Main Authors: Åstebro, Thomas, Tåg, Joacim
• Format: Article
• Language: English
• Subjects: Entrepreneurship; Incorporation; Job creation; Occupational choice; Self-employment; Sole proprietorship
• ISSN: 2352-6734; 2352-6734
• DOI: 10.1016/j.jbvi.2017.06.001

Using a dataset with over 24 million year-employment observations and the universe of more than 230,000 entries into entrepreneurship in one economy 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. These novel measures of job creation show that the average entrepreneur does not create any jobs for any other than him/her-self, and typically arrives from having another job. Thus, short term job creation by entrepreneurs involves a reshuffling of jobs from older to new firms rather than creating new jobs. •We analyze the gross, net, and new job creation by entrepreneurs two and six years after start-up.•The average entrepreneur does not create any jobs for any other than him/herself.•Among the few jobs created in new firms a surprisingly large fraction, between 20 and 60%, originates from unemployment.•Job creation by entrepreneurs involves mostly a reshuffling of jobs from older to new firms rather than creating new jobs.•Nevertheless, entrepreneurship may be an important vehicle for moving individuals out of unemployment.