Abstract
An important question in economic
development is who is responsible for creating more jobs: startups or
established companies. Several researchers have claimed that entrepreneurs are
responsible for most job creation, while others have found that it is the
established companies. This becomes important in deciding which policy
approaches to pursue: recruiting large companies to relocate with different
financial and economic inducements or by relying on entrepreneurship. In this
paper we perform a statistical analysis of job creation by entrepreneurs versus
established companies. We use a data set that covers a larger time period than
other studies, includes all industries and non-employers, and follows
individual companies. We find that over the whole time period that established
companies generated the greater number of jobs. However, in shorter time
periods the entrepreneurs did. This may help in explaining some of the prior
contradictory findings. But from a policy perspective, the findings suggest
that both approaches are necessary.
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