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The Relationship between Firm Births and Job Creation

Author

Listed:
  • André van Stel

    (Erasmus University Rotterdam, and EIM Business and Policy Research, Zoetermeer)

  • David Storey

    (University of Warwick, and EIM Business and Policy Research, Zoetermeer)

Abstract

This paper examines the relationship between firm births and job creation in Great Britain. We use a new data set for 60 British regions, covering the whole of Great Britain, between 1980 and 1998. The central theme of the paper is that, with the exception of a recent paper by Audretsch and Fritsch for Germany, the relationship between new-firm startups and employment growth has previously been examined either with no time-lag or with only a short period lag. The current paper examines short-run as well as long-run relationships and provides results for Great Britain similar to those for Germany. We find that the short-run employment impact of new-firm startups in British regions has been bigger in the 1990s compared to the 1980s. Concerning long-run effects, we find that the employment impact of new-firm startups is strongest after about five years, but the effect disappears after a decade.

Suggested Citation

  • André van Stel & David Storey, 2002. "The Relationship between Firm Births and Job Creation," Tinbergen Institute Discussion Papers 02-052/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20020052
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    References listed on IDEAS

    as
    1. Cressy, Robert, 1996. "Are Business Startups Debt-Rationed?," Economic Journal, Royal Economic Society, vol. 106(438), pages 1253-1270, September.
    2. David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
    3. Anne E. Green & Ivan Turok, 2000. "Employability, Adaptability and Flexibility: Changing Labour Market Prospects," Regional Studies, Taylor & Francis Journals, vol. 34(7), pages 599-600, October.
    4. Murray Z. Frank, 1988. "An Intertemporal Model of Industrial Exit," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(2), pages 333-344.
    5. Brian Ashcroft & James H. Love, 1996. "Firm Births And Employment Change In The British Counties: 1981–89," Papers in Regional Science, Wiley Blackwell, vol. 75(4), pages 483-500, October.
    6. Rees, Hedley & Shah, Anup, 1986. "An Empirical Analysis of Self-employment in the U.K," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 95-108, January.
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    More about this item

    Keywords

    new-firm startups; employment growth; entrepreneurship; Great Britain.;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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