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The Relationship between Firm Births and Job Creation

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  • André van Stel

    () (Erasmus University Rotterdam, and EIM Business and Policy Research, Zoetermeer)

  • David Storey

    (University of Warwick, and EIM Business and Policy Research, Zoetermeer)

Abstract

This paper examines the relationship between firm births and job creation in Great Britain. We use a new data set for 60 British regions, covering the whole of Great Britain, between 1980 and 1998. The central theme of the paper is that, with the exception of a recent paper by Audretsch and Fritsch for Germany, the relationship between new-firm startups and employment growth has previously been examined either with no time-lag or with only a short period lag. The current paper examines short-run as well as long-run relationships and provides results for Great Britain similar to those for Germany. We find that the short-run employment impact of new-firm startups in British regions has been bigger in the 1990s compared to the 1980s. Concerning long-run effects, we find that the employment impact of new-firm startups is strongest after about five years, but the effect disappears after a decade.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-052/3.

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Date of creation: 04 Jun 2002
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Handle: RePEc:dgr:uvatin:20020052

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Related research

Keywords: new-firm startups; employment growth; entrepreneurship; Great Britain.;

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References

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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  2. Frank, Murray Z, 1988. "An Intertemporal Model of Industrial Exit," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 333-44, May.
  3. Anne Green & Ivan Turok, 2000. "Employability, Adaptability and Flexibility: Changing Labour Market Prospects," Regional Studies, Taylor and Francis Journals, vol. 34(7), pages 599-600.
  4. Audretsch, D.B. & Fritsch, M., 1993. "A Note on the Measurement of Entry Rates," Papers 93-5, Bergakademie Freiberg Technical University - Faculty of Economics and Business Administration.
  5. David Audretsch & Roy Thurik, 1997. "Sources of Growth," Tinbergen Institute Discussion Papers 97-109/3, Tinbergen Institute.
  6. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  7. Cooper, Arnold C. & Woo, Carolyn Y. & Dunkelberg, William C., 1989. "Entrepreneurship and the initial size of firms," Journal of Business Venturing, Elsevier, vol. 4(5), pages 317-332, September.
  8. David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor and Francis Journals, vol. 36(2), pages 113-124.
  9. Rees, Hedley & Shah, Anup, 1986. "An Empirical Analysis of Self-employment in the U.K," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 95-108, January.
  10. van Praag, C M & Cramer, J S, 2001. "The Roots of Entrepreneurship and Labour Demand: Individual Ability and Low Risk Aversion," Economica, London School of Economics and Political Science, vol. 68(269), pages 45-62, February.
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