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Entrepreneurship, job creation and wage growth

Author

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  • Nikolaj Malchow-Møller

    ()

  • Bertel Schjerning

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  • Anders Sørensen

    ()

Abstract

This paper analyses the importance of entrepreneurs for job creation and wage growth. Relying on unique data that covers all plants, firms and individuals in the Danish private sector, we are able to distil a number of different measures of entrepreneurial plants from the set of new plants, including measures that much more precisely capture the "truly new” or "entrepreneurial” plants than in previous studies. Using these data, we find that while new plants in general account for one third of the gross job creation in the economy, entrepreneurial plants are responsible for between 15% and 25% of this, and thus only account for up to 8% of total gross job creation in the economy. However, entrepreneurial plants seem to generate more additional jobs than other new plants in the years following entry. Finally, the jobs generated by entrepreneurial plants are to a large extent low-wage jobs, as they are not found to contribute to the growth in average wages. However, this insight varies across the different types of entrepreneurial plants.
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Suggested Citation

  • Nikolaj Malchow-Møller & Bertel Schjerning & Anders Sørensen, 2011. "Entrepreneurship, job creation and wage growth," Small Business Economics, Springer, vol. 36(1), pages 15-32, January.
  • Handle: RePEc:kap:sbusec:v:36:y:2011:i:1:p:15-32 DOI: 10.1007/s11187-009-9173-y
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    References listed on IDEAS

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    1. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
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    Citations

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    Cited by:

    1. Alessandra Colombelli & Jackie Krafft & Marco Vivarelli, 2016. "To be born is not enough: the key role of innovative start-ups," Small Business Economics, Springer, pages 277-291.
    2. David Audretsch & Marcel Hülsbeck & Erik Lehmann, 2012. "Regional competitiveness, university spillovers, and entrepreneurial activity," Small Business Economics, Springer, pages 587-601.
    3. 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.
    4. Marco Vivarelli, 2016. "The middle income trap: a way out based on technological and structural change," Economic Change and Restructuring, Springer, vol. 49(2), pages 159-193, August.
    5. repec:eee:iburev:v:26:y:2017:i:3:p:448-460 is not listed on IDEAS
    6. LIU Yang, 2017. "Wages, Job Productivity, and Job Creation and Destruction: Evidence from Japanese division-level employment data," Discussion papers 17060, Research Institute of Economy, Trade and Industry (RIETI).
    7. P.D. Koellinger & A.R. Thurik, 0000. "Entrepreneurship and the Business Cycle," Tinbergen Institute Discussion Papers 09-032/3, Tinbergen Institute, revised 30 Sep 2009.
    8. Roy Thurik, 2014. "Entrepreneurship and the business cycle," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-90.
    9. 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.
    10. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.

    More about this item

    Keywords

    Entrepreneurial establishments; Job creation; Wage growth; L26; J21; J31;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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