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Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation

In: Small Businesses in the Aftermath of the Crisis

Author

Listed:
  • E. J. Reedy

    (The Ewing Marian Kauffman Foundation)

  • Robert J. Strom

    (The Ewing Marian Kauffman Foundation)

Abstract

Although understandable in light of its traumatic impact, the Great Recession of 2007–2009 may be distracting attention from a more fundamental troubling economic trend. The United States appears to be suffering from a long-term leak in job creation that pre-dates the 2007–2009 recession and has the potential to persist for an unknown time. The heart of the problem is a pullback by newly created businesses, the economy’s most critical source of job creation, which are generating substantially fewer jobs than one would expect based on past experience. In other recent research, the Ewing Marion Kauffman Foundation pointed to downward trends in job creation economy wide (see Haltiwanger J, Jarmin R, Miranda J (2011) Historically large decline in job creation from startup and existing firms in the 2008–2009 recession. Kauffman Foundation). In this report, part of the Kauffman Foundation Research Series on Firm Formation and Economic Growth, we flesh out these findings by examining job creation in young businesses over an extended period.

Suggested Citation

  • E. J. Reedy & Robert J. Strom, 2012. "Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation," Contributions to Economics, in: Giorgio Calcagnini & Ilario Favaretto (ed.), Small Businesses in the Aftermath of the Crisis, edition 127, pages 71-85, Springer.
    • Handle: RePEc:spr:conchp:978-3-7908-2852-8_4
    DOI: 10.1007/978-3-7908-2852-8_4
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    Citations

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    Cited by:

    1. Benjamin Pugsley & Aysegul Sahin & Fatih Karahan, 2015. "Understanding the 30 year Decline in Business Dynamism: a General Equilibrium Approach," 2015 Meeting Papers 1333, Society for Economic Dynamics.
    2. Alon, Titan & Berger, David & Dent, Robert & Pugsley, Benjamin, 2018. "Older and slower: The startup deficit’s lasting effects on aggregate productivity growth," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 68-85.
    3. Benjamin Wild Pugsley & Ay’egul ahin, 2019. "Grown-up Business Cycles," The Review of Financial Studies, Society for Financial Studies, vol. 32(3), pages 1102-1147.
    4. Hugo Hopenhayn & Julian Neira & Rish Singhania, 2022. "From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share," Econometrica, Econometric Society, vol. 90(4), pages 1879-1914, July.
    5. Julian Neira & Rish Singhania, 2022. "The role of corporate taxes in the decline of the startup rate," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1277-1295, July.
    6. Sergio Salgado, 2019. "Technical Change and Entrepreneurship," 2019 Meeting Papers 634, Society for Economic Dynamics.

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