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Entrepreneurship, Job Creation, and Wage Growth

Author

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  • Nikolaj Malchow-Møller

    (University of Southern Denmark)

  • Bertel Schjerning

    (Department of Economics, University of Copenhagen)

  • Anders Sørensen

    (Copenhagen Business School)

Abstract

This paper analyses the importance of entrepreneurs for job creation and wage growth. Relying on unique data that cover all establishments, firms and individuals in the Danish private sector, we are able to distil a number of different subsets from the total set of new establishments – subsets which allow us to more precisely capture the "truly new" or "entrepreneurial" establishments than in previous studies. Using these data, we find that while new establishments in general account for one third of the gross job creation in the economy, entrepreneurial establishments are responsible for around 25% of this, and thus only account for about 8% of total gross job creation in the economy. However, entrepreneurial establishments seem to generate more additional jobs than other new establishments in the years following entry. Finally, the jobs generated by entrepreneurial establishments are to a large extent low-wage jobs, as they are not found to contribute to the growth in average wages.

Suggested Citation

  • Nikolaj Malchow-Møller & Bertel Schjerning & Anders Sørensen, 2009. "Entrepreneurship, Job Creation, and Wage Growth," CAM Working Papers 2009-01, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    • Handle: RePEc:kud:kuieca:2009_01
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    Cited by:

    1. Rotger, Gabriel Pons & Gørtz, Mette & Storey, David J., 2012. "Assessing the effectiveness of guided preparation for new venture creation and performance: Theory and practice," Journal of Business Venturing, Elsevier, vol. 27(4), pages 506-521.
    2. Arnold, Lutz G. & Zelzner, Sebastian, 2022. "Financial trading versus entrepreneurship: Competition for talent and negative feedback effects," The Quarterly Review of Economics and Finance, Elsevier, vol. 86(C), pages 186-199.
    3. Alessandra Colombelli & Jackie Krafft & Marco Vivarelli, 2016. "To be born is not enough: the key role of innovative start-ups," Small Business Economics, Springer, vol. 47(2), pages 277-291, August.
    4. Coad, Alex & Kaiser, Ulrich & Kuhn, Johan, 2021. "Spin doctors vs the spawn of capitalism: Who founds university and corporate startups?," Research Policy, Elsevier, vol. 50(10).
    5. Giuliano Guerra & Roberto Patuelli, 2016. "The Role of Job Satisfaction in Transitions into Self–Employment," Entrepreneurship Theory and Practice, , vol. 40(3), pages 543-571, May.
    6. Anthony Brown & Royston Meriton & Timothy Devinney & Mario Kafouros & Flor Silvestre Gerardo & Rajinder Bhandal, 2021. "Migrant human and political capitals value in entrepreneur enterprise performance. A comparative study of four emerging markets," International Entrepreneurship and Management Journal, Springer, vol. 17(2), pages 665-692, June.
    7. LIU Yang, 2017. "Effects of Wages and Job Productivity on Job Creation and Destruction: Evidence from Japanese division-level employment data," Discussion papers 17060, Research Institute of Economy, Trade and Industry (RIETI).
    8. Philip T. Roundy & Dutch Fayard, 2019. "Dynamic Capabilities and Entrepreneurial Ecosystems: The Micro-Foundations of Regional Entrepreneurship," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 28(1), pages 94-120, March.
    9. Saras D. Sarasvathy, 2021. "The Middle Class of Business: Endurance as a Dependent Variable in Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 45(5), pages 1054-1082, September.
    10. Bogdan Robert IOANE & Nicolae BIBU & Laura BRANCU & Ana NĂSTASE, 2020. "Entrepreneurship Intention Among Business Students in Romania," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 21(5), pages 703-718, December.
    11. Leung, Yik Kiu & Franken, Ingmar & Thurik, Roy & Driessen, Martijn & Kamei, Katsuyuki & Torrès, Olivier & Verheul, Ingrid, 2021. "Narcissism and entrepreneurship: Evidence from six datasets," Journal of Business Venturing Insights, Elsevier, vol. 15(C).
    12. David Audretsch & Marcel Hülsbeck & Erik Lehmann, 2012. "Regional competitiveness, university spillovers, and entrepreneurial activity," Small Business Economics, Springer, vol. 39(3), pages 587-601, October.
    13. Roy Thurik, 2014. "Entrepreneurship and the business cycle," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-90, October.
    14. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(6), pages 1453-1495, December.
    15. Jan & Aleksandra & Windham, 2021. "City policies to promote entrepreneurship: A cross-country comparison of Poland and Germany," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 17(2), pages 159-185.
    16. Kovalenko, Tim & Sauerbier, Timo & Schröpf, Benedikt, 2023. "The fall and rebound of average establishment size in West Germany," Discussion Papers 126, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    17. Choquette, Eliane & Rask, Morten & Sala, Davide & Schröder, Philipp, 2017. "Born Globals—Is there fire behind the smoke?," International Business Review, Elsevier, vol. 26(3), pages 448-460.
    18. Welter, Chris & Holcomb, Tim R. & McIlwraith, John, 2023. "The inefficiencies of venture capital funding," Journal of Business Venturing Insights, Elsevier, vol. 19(C).
    19. Mário Franco, 2020. "Entrepreneurship, Competitiveness and Innovation," Sustainability, MDPI, vol. 12(16), pages 1-5, August.
    20. Andrew G Ross & Kenny Crossan & Linda Juleff, 2012. "How accurate are VAT registrations as a measure of entrepreneurship?," Local Economy, London South Bank University, vol. 27(3), pages 279-296, May.
    21. Nagel, Hanskje & Rosendahl Huber, Laura & Van Praag, Mirjam & Goslinga, Sjoerd, 2019. "The effect of a tax training program on tax compliance and business outcomes of starting entrepreneurs: Evidence from a field experiment," Journal of Business Venturing, Elsevier, vol. 34(2), pages 261-283.
    22. Benedikt Schröpf, 2023. "The dynamics of wage dispersion between firms: the role of firm entry and exit," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-29, December.
    23. Philip T. Roundy, 2019. "“It takes a village” to support entrepreneurship: intersecting economic and community dynamics in small town entrepreneurial ecosystems," International Entrepreneurship and Management Journal, Springer, vol. 15(4), pages 1443-1475, December.
    24. Kuhn, Johan M. & Malchow-Møller, Nikolaj & Sørensen, Anders, 2016. "Job creation and job types – New evidence from Danish entrepreneurs," European Economic Review, Elsevier, vol. 86(C), pages 161-187.

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    More about this item

    Keywords

    job creation; entrepreneurial establishments; wage growth;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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