The role of entrepreneurship in U.S. and European job growth

Monthly Labor Review

Volumn 123, Issue 7, 2000, Pages 3-16

  Bednarzik, Robert W ^a  

^a NONE

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EID: 0041079613     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (40)

1. The European Union consists of the following countries: Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal, Finland, Sweden, and the United Kingdom.
2. Dun and Bradstreet Corporation also tabulates the opening and closing of U.S. establishments and tracks their employment level over time. However, research suggests that these data overstate the actual number of openings and closures.
3. See Paul Reynolds, Michael Hay, and S. Michael Camp, Global Entrepreneurship Monitor, 1999, Executive Report (Ewing Marion Kauffman Foundation, Center for Entrepreneurial Leadership, 1999).
4. For an excellent description and documentation of the Longitudinal Establishment and Enterprise Microdata database, see Zoltan Acs and Catherine Armington, Longitudinal Establishment and Enterprise microdata LEEM Documentation (Center for Economic Studies, U.S. Census Bureau, 1998).
5. For the analysis of the sectoral composition of employment, U.S. data for this section have been transformed to match those compiled in the European Union, which are classified according to the Statistical Classification of Economic Activities in the European Community (NACE Revision 1).
6. Industry includes mining, construction, and manufacturing, the typical international comparative definition.
7. Under the NACE Revision 1 industry classification scheme, communal services include: public administration, education, health and social work, sanitary services, membership organizations, recreational activities, personal and other services, and private households.
8. It should be noted, however, that through new technologies and other productivity-enhancing techniques, manufacturing's share of total output has slipped only slightly from around 30 percent since 1972, while the services industry's share has crept up from 14 percent to 18 percent. That is, manufacturing's role in the overall economy has remained important even though its job count has dwindled significantly.
9. The Standard Industrial Classification System (SIC) is a U.S. classification system used to identify all establishment-based industries or government establishments. For more information, see Standard Industrial Classification Manual, 1987 (Washington, Office of Management and Budget).
10. John Haltiwanger, and C. J. Krizan, "Small Business and Job Creation in the United States," in Zoltan J. Acs, ed., Are Small Firms Important? (Norwell, Massachusetts, Kluwer Academic Publishers, 1999); Steven J. Davis, John Haltiwanger, and Scott Schuh, "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Labor Markets, Employment Policy, and Job Creation, 5, 1994; Steven J. Davis, John Haltiwanger, and Scott Schuh, Job Creation and Destruction (Massachusetts, MIT Press, 1997); Timothy Dunne, Mark Roberts, and Larry Samuelson, "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, July 1989; Timothy Dunne, Mark Roberts, and Larry Samuelson, "The Growth and Failure of U.S. Manufacturing Plants," Quarterly Journal of Economics, vol. 104, 1989; and D. Evans, "The Relationship between Firm Growth, Size and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, vol. 15, 1987.
11. John Haltiwanger, and C. J. Krizan, "Small Business and Job Creation in the United States," in Zoltan J. Acs, ed., Are Small Firms Important? (Norwell, Massachusetts, Kluwer Academic Publishers, 1999); Steven J. Davis, John Haltiwanger, and Scott Schuh, "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Labor Markets, Employment Policy, and Job Creation, 5, 1994; Steven J. Davis, John Haltiwanger, and Scott Schuh, Job Creation and Destruction (Massachusetts, MIT Press, 1997); Timothy Dunne, Mark Roberts, and Larry Samuelson, "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, July 1989; Timothy Dunne, Mark Roberts, and Larry Samuelson, "The Growth and Failure of U.S. Manufacturing Plants," Quarterly Journal of Economics, vol. 104, 1989; and D. Evans, "The Relationship between Firm Growth, Size and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, vol. 15, 1987.
12. John Haltiwanger, and C. J. Krizan, "Small Business and Job Creation in the United States," in Zoltan J. Acs, ed., Are Small Firms Important? (Norwell, Massachusetts, Kluwer Academic Publishers, 1999); Steven J. Davis, John Haltiwanger, and Scott Schuh, "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Labor Markets, Employment Policy, and Job Creation, 5, 1994; Steven J. Davis, John Haltiwanger, and Scott Schuh, Job Creation and Destruction (Massachusetts, MIT Press, 1997); Timothy Dunne, Mark Roberts, and Larry Samuelson, "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, July 1989; Timothy Dunne, Mark Roberts, and Larry Samuelson, "The Growth and Failure of U.S. Manufacturing Plants," Quarterly Journal of Economics, vol. 104, 1989; and D. Evans, "The Relationship between Firm Growth, Size and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, vol. 15, 1987.
13. John Haltiwanger, and C. J. Krizan, "Small Business and Job Creation in the United States," in Zoltan J. Acs, ed., Are Small Firms Important? (Norwell, Massachusetts, Kluwer Academic Publishers, 1999); Steven J. Davis, John Haltiwanger, and Scott Schuh, "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Labor Markets, Employment Policy, and Job Creation, 5, 1994; Steven J. Davis, John Haltiwanger, and Scott Schuh, Job Creation and Destruction (Massachusetts, MIT Press, 1997); Timothy Dunne, Mark Roberts, and Larry Samuelson, "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, July 1989; Timothy Dunne, Mark Roberts, and Larry Samuelson, "The Growth and Failure of U.S. Manufacturing Plants," Quarterly Journal of Economics, vol. 104, 1989; and D. Evans, "The Relationship between Firm Growth, Size and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, vol. 15, 1987.
14. John Haltiwanger, and C. J. Krizan, "Small Business and Job Creation in the United States," in Zoltan J. Acs, ed., Are Small Firms Important? (Norwell, Massachusetts, Kluwer Academic Publishers, 1999); Steven J. Davis, John Haltiwanger, and Scott Schuh, "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Labor Markets, Employment Policy, and Job Creation, 5, 1994; Steven J. Davis, John Haltiwanger, and Scott Schuh, Job Creation and Destruction (Massachusetts, MIT Press, 1997); Timothy Dunne, Mark Roberts, and Larry Samuelson, "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, July 1989; Timothy Dunne, Mark Roberts, and Larry Samuelson, "The Growth and Failure of U.S. Manufacturing Plants," Quarterly Journal of Economics, vol. 104, 1989; and D. Evans, "The Relationship between Firm Growth, Size and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, vol. 15, 1987.
15. John Haltiwanger, and C. J. Krizan, "Small Business and Job Creation in the United States," in Zoltan J. Acs, ed., Are Small Firms Important? (Norwell, Massachusetts, Kluwer Academic Publishers, 1999); Steven J. Davis, John Haltiwanger, and Scott Schuh, "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Labor Markets, Employment Policy, and Job Creation, 5, 1994; Steven J. Davis, John Haltiwanger, and Scott Schuh, Job Creation and Destruction (Massachusetts, MIT Press, 1997); Timothy Dunne, Mark Roberts, and Larry Samuelson, "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, July 1989; Timothy Dunne, Mark Roberts, and Larry Samuelson, "The Growth and Failure of U.S. Manufacturing Plants," Quarterly Journal of Economics, vol. 104, 1989; and D. Evans, "The Relationship between Firm Growth, Size and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, vol. 15, 1987.
16. Small Business Growth by Major Industry, 1988-1995 (Washington, Small Business Administration, Office of Advocacy, 1998); and Mergers and Acquisitions in the United States, 1990-1994 (Small Business Administration, Office of Advocacy, Washington, 1998).
17. Small Business Growth by Major Industry, 1988-1995 (Washington, Small Business Administration, Office of Advocacy, 1998); and Mergers and Acquisitions in the United States, 1990-1994 (Small Business Administration, Office of Advocacy, Washington, 1998).
18. "Job Gains and Job Losses in Firms," Employment Outlook (Paris, Organisation for Economic Co-operation and Development (OECD), 1994).
19. Reynolds, Hay, and Camp, Global Entrepreneurship Monitor, 1999.
20. John Baldwin, Timothy Dunne, and John Haltiwanger, "A comparison of job creation and job destruction in Canada and the United States," Review of Economics and Statistics, vol. 80, 1998.
21. Robert E. Hall, "The Concentration of Job Destruction," NBER Working Paper no. W7025 (New York, National Bureau of Economic Research, 1999).
22. Some of the growth of employment in large firms (100 or more employees) over time results from expanding small firms moving to a larger size category. Of the total number of jobs in 1990 that survived to 1994 (76 million), 96 percent remained in small establishments (less than 100 employees), while 4 percent of the jobs were in establishments that were acquired by large firms or in establishments that expanded into the large-firm size category. See Small Business Administration and Executive Office of the President, "New Data for Analysis for Small Business Job Creation," The State of Small Business: 1999 (Washington, 1999), chapter 2.
23. Davis, Haltiwanger, and Schuh, Job Creation and Destruction, 1997.
24. Bruce Phillips, "The Influence of Industry and Location on Small Firm Failure Rates," Frontiers of Entrepreneurship Research 1993, Proceedings of the Thirteenth Annual Babson College Entrepreneurship Research Conference (Babson Park, MA, 1993).
25. Bruce Phillips and Bruce A. Kirchhoff, "Formation, Growth and Survival; Small Firm Dynamics in the U.S. Economy," Small Business Economics, vol. 1, 1989, pp. 65-74.
26. Preliminary data for 1994-98 showed the same inverse relationship between firm size and net job creation. When comparing the late 1990s with the early 1990s, however, net job creation was much higher in the 1994-98 period in very small firms (1-4 employees) and it was negative among very large firms (500 or more employees), mainly as a result of firm deaths. Unpublished data from Bruce Phillips, Small Business Administration, June 1999.
27. Acs, and Armington, Job Flow Dynamics in the Service Sector (Washington, Center for Economic Studies, Census Bureau, 1999).
28. Davis, Haltiwanger, and Schuh, "Small Business and Job Creation;" Steven J. Davis, and John Haltiwanger, "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," Quarterly Journal of Economics, vol. 107, 1992; Dunne, Roberts, and Samuelson, "Plant Turnover and Gross Employment Flows;" Dunne, Roberts and Samuelson, "The Growth and Failure of U.S. Manufacturing Plants;" and Evans, "The Relationship between Firm Growth, Size and Age."
29. Davis, Haltiwanger, and Schuh, "Small Business and Job Creation;" Steven J. Davis, and John Haltiwanger, "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," Quarterly Journal of Economics, vol. 107, 1992; Dunne, Roberts, and Samuelson, "Plant Turnover and Gross Employment Flows;" Dunne, Roberts and Samuelson, "The Growth and Failure of U.S. Manufacturing Plants;" and Evans, "The Relationship between Firm Growth, Size and Age."
30. Davis, Haltiwanger, and Schuh, "Small Business and Job Creation;" Steven J. Davis, and John Haltiwanger, "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," Quarterly Journal of Economics, vol. 107, 1992; Dunne, Roberts, and Samuelson, "Plant Turnover and Gross Employment Flows;" Dunne, Roberts and Samuelson, "The Growth and Failure of U.S. Manufacturing Plants;" and Evans, "The Relationship between Firm Growth, Size and Age."
31. Davis, Haltiwanger, and Schuh, "Small Business and Job Creation;" Steven J. Davis, and John Haltiwanger, "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," Quarterly Journal of Economics, vol. 107, 1992; Dunne, Roberts, and Samuelson, "Plant Turnover and Gross Employment Flows;" Dunne, Roberts and Samuelson, "The Growth and Failure of U.S. Manufacturing Plants;" and Evans, "The Relationship between Firm Growth, Size and Age."
32. Davis, Haltiwanger, and Schuh, "Small Business and Job Creation;" Steven J. Davis, and John Haltiwanger, "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," Quarterly Journal of Economics, vol. 107, 1992; Dunne, Roberts, and Samuelson, "Plant Turnover and Gross Employment Flows;" Dunne, Roberts and Samuelson, "The Growth and Failure of U.S. Manufacturing Plants;" and Evans, "The Relationship between Firm Growth, Size and Age."
33. David Stevens and Julia Lang, "Small Business Employment Dynamics Revisited," The Dubious Benefits of Small Business for Job Growth and Wages (Washington, Economic Policy Institute, 1998). Bruce Phillips argued that Stevens and Lang used an inappropriate database for analyzing the relationship between job creation and business size; they used quarterly unemployment insurance reports where establishments are not clearly distinguished. See Bruce Phillips, Comments on the Economic Policy Institute's The Dubious Benefits of Small Business for Job Growth and Wages, Unpublished, 1998.
34. David Stevens and Julia Lang, "Small Business Employment Dynamics Revisited," The Dubious Benefits of Small Business for Job Growth and Wages (Washington, Economic Policy Institute, 1998). Bruce Phillips argued that Stevens and Lang used an inappropriate database for analyzing the relationship between job creation and business size; they used quarterly unemployment insurance reports where establishments are not clearly distinguished. See Bruce Phillips, Comments on the Economic Policy Institute's The Dubious Benefits of Small Business for Job Growth and Wages, Unpublished, 1998.
35. See Reynolds, Hay, and Camp, Global Entrepreneurship Monitor, 1999.
36. A correlation of 0.61, which was marginally significant (p = 0.08), was reported between start-up rates and economic growth in the Global Entrepreneurship Monitor study.
37. Michael Milken, "Prosperity and Social Capital," The Wall Street Journal, June 23, 1999. For a number of countries, the Milken Institute has developed a "capital access index," which measures the ease of raising capital. The United States ranks first at 100.0, followed by Switzerland (97.3) and Hong Kong (94.4). The European Union ranges from 94.0 for the United Kingdom to 46.3 for Greece. The average for the European Union (less Luxembourg for which no figure was available) was 75.0. See Glenn Yago, Lalita Ramesh, Dan Brumbaugh, and James Barth, Capital Access Index (Santa Monica, CA, Milken Institute, May 1999).
38. Michael Milken, "Prosperity and Social Capital," The Wall Street Journal, June 23, 1999. For a number of countries, the Milken Institute has developed a "capital access index," which measures the ease of raising capital. The United States ranks first at 100.0, followed by Switzerland (97.3) and Hong Kong (94.4). The European Union ranges from 94.0 for the United Kingdom to 46.3 for Greece. The average for the European Union (less Luxembourg for which no figure was available) was 75.0. See Glenn Yago, Lalita Ramesh, Dan Brumbaugh, and James Barth, Capital Access Index (Santa Monica, CA, Milken Institute, May 1999).
39. See Reynolds, Hay, and Camp, Global Entrepreneurship Monitor, 1999.
40. Bradley R. Schiller, and Philip Crewson, Entrepreneurial Origins: A Longitudinal Inquiry (Washington, Small Business Administration, Office of Advocacy, 1994.)