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Job Creation by the Self-employed: The Roles of Entrepreneurial and Financial Capital

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  • Andrew Henley

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Abstract

The paper reports micro-econometric evidence on the factors that influence the ability of the small businesses to create employment. It uses data on self-employment from a British panel survey. In particular it investigates the contributions of financial and entrepreneurial capital to job creation. Housing wealth appears to be significantly associated with small business job creation. It appears to act as an important source of financial collateral. The parental background of the small business owner is also significantly associated with job creation. Successful entrepreneurs are more likely to have had self-employed parents, and in particular parents who employed others. Educational attainment, in particular at degree level, is also important. The preferred model incorporates individual random effects and the significance of these suggests the importance of unobserved latent entrepreneurial ability. Copyright Springer 2005

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  • Andrew Henley, 2005. "Job Creation by the Self-employed: The Roles of Entrepreneurial and Financial Capital," Small Business Economics, Springer, vol. 25(2), pages 175-196, September.
  • Handle: RePEc:kap:sbusec:v:25:y:2005:i:2:p:175-196
    DOI: 10.1007/s11187-004-6480-1
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Darja Reuschke, 2011. "Self-Employment and Geographical Mobility in Germany," SOEPpapers on Multidisciplinary Panel Data Research 417, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. repec:bla:jemstr:v:26:y:2017:i:1:p:3-34 is not listed on IDEAS
    3. repec:kap:sbusec:v:50:y:2018:i:1:d:10.1007_s11187-017-9887-1 is not listed on IDEAS
    4. Robert W. Fairlie & Javier Miranda, 2017. "Taking the Leap: The Determinants of Entrepreneurs Hiring Their First Employee," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 3-34, February.
    5. repec:oup:cjrecs:v:10:y:2017:i:3:p:543-557. is not listed on IDEAS
    6. José María Millán & Emilio Congregado & Concepción Román, 2010. "Determinants of Self-Employment Dynamics and their Implications on Entrepreneurial Policy Effectiveness," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 72, pages 45-76.
    7. Alex Coad & Kristian Nielsen & Bram Timmermans, 2017. "My first employee: an empirical investigation," Small Business Economics, Springer, vol. 48(1), pages 25-45, January.
    8. Giuliano Guerra, 2011. "The Role of Job Satisfaction in Transitions into Self-Employment," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1201, USI Università della Svizzera italiana.
    9. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    10. Millán, Ana & Millán, José María & Román, Concepción & van Stel, André, 2013. "How does employment protection legislation influence hiring and firing decisions by the smallest firms?," Economics Letters, Elsevier, vol. 121(3), pages 444-448.
    11. Casey J. Frid & David M. Wyman & Bentley Coffey, 2016. "Effects of wealth inequality on entrepreneurship," Small Business Economics, Springer, vol. 47(4), pages 895-920, December.
    12. Backman, Mikaela & Karlsson, Charlie, 2013. "Exploration of Wisdom Ages: Firm survival," Working Paper Series in Economics and Institutions of Innovation 339, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    13. Henley, Andrew, 2015. "The Post Crisis Growth in the Self-Employed: Volunteers or Reluctant Recruits?," IZA Discussion Papers 9232, Institute for the Study of Labor (IZA).
    14. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Business Formation: Evidence from Canadian provinces," MPRA Paper 52327, University Library of Munich, Germany.
    15. Eichhorst, Werner & Kahanec, Martin & Kendzia, Michael J. & Wehner, Caroline & al., et, 2013. "Report No. 54: Social Protection Rights of Economically Dependent Self-employed Workers," IZA Research Reports 54, Institute for the Study of Labor (IZA).
    16. Scott L. Newbert & Michael D. Stouder, 2011. "Justice in entrepreneurial organizations," International Journal of Social Economics, Emerald Group Publishing, vol. 38(5), pages 453-465, April.
    17. Joanna Tyrowicz & Magdalena Smyk, 2017. "Pushed into necessity? Labor market inequality and entrepreneurship of disadvantaged group," GRAPE Working Papers 6, GRAPE Group for Research in Applied Economics.
    18. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Small Business Lending: Evidence from Canada," MPRA Paper 50813, University Library of Munich, Germany.
    19. Disney, Richard & Gathergood, John, 2009. "Housing wealth, liquidity constraints and self-employment," Labour Economics, Elsevier, vol. 16(1), pages 79-88, January.
    20. Aparna Mathur, 2010. "Health insurance and job creation by the self-employed," Small Business Economics, Springer, vol. 35(3), pages 299-317, October.
    21. Vial, Virginie & Hanoteau, Julien, 2015. "Returns to Micro-Entrepreneurship in an Emerging Economy: A Quantile Study of Entrepreneurial Indonesian Households’ Welfare," World Development, Elsevier, vol. 74(C), pages 142-157.
    22. Kameliia Petrova, 2012. "Part-time entrepreneurship and financial constraints: evidence from the Panel Study of Entrepreneurial Dynamics," Small Business Economics, Springer, vol. 39(2), pages 473-493, September.
    23. Jose Maria Millan & Emilio Congregado & Concepcion Roman & Mirjam van Praag & Andre van Stel, 2011. "The Value of an Educated Population for an Individual's Entrepreneurship Success," Tinbergen Institute Discussion Papers 11-066/3, Tinbergen Institute, revised 06 May 2014.
    24. Tammy Rogers, 2012. "Bank market structure and entrepreneurship," Small Business Economics, Springer, vol. 39(4), pages 909-920, November.

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