In a period of sluggish employment growth and slow-growing productivity in most OECD countries, the central role played by start-ups and young firms in creating jobs and bringing innovation to market becomes increasingly important in policy debates.
The DynEmp project presents new evidence on the employment dynamics of start-ups and incumbents across more than 20 OECD and non-OECD economies since 1998.
Business dynamics, start-ups and job creation
While market entrants have a disproportionally large contribution to job creation in all countries, significant differences exist in the extent to which they do so. Cross-country differences can be analysed by looking at differences in job contribution by start-ups at the time of entry, determined by entry rates and average size at entry; and by also looking at differences in post-entry job creation by start-ups, which in turn depends on post-entry growth and the survival rate for new firms.
The report "No Country for Young Firms? Start-up dynamics and national policies" also suggests that national policies and framework conditions are likely to explain some of these differences. Policy failures appear more detrimental to start-ups than to incumbents, especially in the most risky and volatile sectors.
The project and database
The first phase of the project, called DynEmp Express, led to the creation of a database based on firm-level sources which presents a detailed portrait of the business structure and dynamics of 17 OECD countries plus Brazil over the period 2001-2011.
A number of significant extensions have been implemented in the second phase of the project, DynEmp v2, with increased country coverage. DynEmp v2 added the ability to follow firm performance over time. The data was also broken down into greater detail so that it now covers sub-sectors, allowing for more detailed analysis.
DynEmp v.3, the latest edition, includes, among new features, the possibility to specify information on ownership, trade status, the ability to identify truly new firms, and a focus on ICT sectors. An extension of the DynEmp methodology to study employment dynamics at regional and local level is ongoing. The next steps of the project will examine the quality and inclusiveness of job created by young firms.