Author:

Keywords:

startup, new firm growth, firm growth, employment, Social Sciences, Business, Economics, Management, Business & Economics, Startup, New firm growth, Firm growth, Employment, INNOVATION, CREATION, ENTRY, 14 Economics, 15 Commerce, Management, Tourism and Services, Business & Management, 35 Commerce, management, tourism and services, 38 Economics

Abstract:

The present paper uses quarterly data from the social security registry covering the full population of Belgian firms to analyze how the secular decline in the firm entry rate affects aggregate employment. To this end, we disentangle the entry margin into two channels: the overall employment of new firms (the start-up employment) and the share of start-up employment by sector (the sectoral composition of start-ups). We find that the decline in start-up employment slowed down the growth rate of aggregate employment by 26% over the 2009Q2–2017Q1 period by shifting the age distribution of firms toward older firms. The sectoral composition of start-ups accelerated the decline in the manufacturing sector and prevented the distribution sector from a potential decline, while leaving the aggregate employment unchanged.