Business dynamics and employment growth: A cross-country analysis
AbstractThis paper examines the relationship between business dynamics (entry and exit of firms) and employment growth at the country-industry level. We use a cross-country data set with harmonized data on numbers of entries and exits for a selection of fast growing and innovative industries in six developed economies. In our multiple regression analysis we allow for separate effects of both the extent of business dynamics (volatility of firms) and the composition of business dynamics (net-entry of firms). We also test for the existence of an 'optimal' level of business volatility, possibly indicating that entry and exit levels are too high in certain industries. We find positive employment effects of net-entry rates, both for manufacturing industries and for services industries. Regarding volatility, we find a positive effect for manufacturing but no effect for services. This implies that different government policies may be required to achieve growth in these sectors. We find no evidence for an 'optimal' level of business volatility.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EIM Business and Policy Research in its series Scales Research Reports with number H200310.
Length: 27 pages
Date of creation: 16 Mar 2004
Date of revision:
Contact details of provider:
Postal: P.O. Box 7001, 2701 AA Zoetermeer
Phone: (+31) 79 341 36 34
Fax: (+31) 79 341 50 24
Web page: http://www.entrepreneurship-sme.eu/
More information through EDIRC
Other versions of this item:
- Andre van Stel & Bart Diephuis, 2004. "Business dynamics and employment growth: a cross-country analysis," Papers on Entrepreneurship, Growth and Public Policy 2004-32, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Carree, M. A. & Thurik, A. R., 1999. "The carrying capacity and entry and exit flows in retailing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 985-1007, October.
- Bosma, Niels & Nieuwenhuijsen, Henry, 2002.
"Turbulence and productivity; an analysis of 40 Dutch regions in the period 1988-1996,"
ERSA conference papers
ersa02p233, European Regional Science Association.
- Henry Nieuwenhuijsen & Niels Bosma, 2002. "Turbulence and Productivity; an analysis of 40 Dutch regions in the period 1988-1996," Scales Research Reports N200205, EIM Business and Policy Research.
- Joris Meijaard, 2001. "Making sense of the New Economy," Scales Research Reports H200009, EIM Business and Policy Research.
- Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2003. "Comparative Analysis of Firm Demographics and Survival: Micro-Level Evidence for the OECD Countries," OECD Economics Department Working Papers 348, OECD Publishing.
- André van Stel & David Storey, 2003. "Investigating the link between firm births and job creation in British regions, 1980-98: Is there a Upas Tree effect?," Scales Research Reports N200317, EIM Business and Policy Research.
- D.B. Audretsch & M.A. Carree & A.R. Thurik, 2001. "Does Entrepreneurship reduce Unemployment?," Tinbergen Institute Discussion Papers 01-074/3, Tinbergen Institute, revised 24 Oct 2008.
- Michael Fritsch & Pamela Mueller, 2004. "The Effects of New Business Formation on Regional Development over Time," Papers on Entrepreneurship, Growth and Public Policy 2004-36, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- Fritsch, Michael & Mueller, Pamela, 2004. "The effect of new firm formation on regional development over time," Freiberg Working Papers 2004,01, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
- Zoltan J Acs & Catherine Armington, 2003. "Endogenous Growth and Entrepreneurial Activity in Cities," Working Papers 03-02, Center for Economic Studies, U.S. Census Bureau.
- David Audretsch & Roy Thurik, 0000. "Sources of Growth," Tinbergen Institute Discussion Papers 97-109/3, Tinbergen Institute.
- David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
- Roy Thurik, 2003. "Entrepreneurship and Unemployment in the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(3), pages 264-290, 08.
- Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
- Giovanni Russo & Aura Reggiani & Peter Nijkamp, 2005. "Spatial Activity and Labour Market Patterns," Tinbergen Institute Discussion Papers 05-107/3, Tinbergen Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster EIM).
If references are entirely missing, you can add them using this form.