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Industry and entrepreneurship

DynEmp: Measuring job creation by start-ups and young firms

 

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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 the 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 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" 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 riskiest and most volatile sectors. 

Policy note (pdf)

Key facts

  • On average across OECD countries and over years, young firms account for about 20% of employment but create almost half of new jobs.
  • Transformational entrepreneurs’ start-ups – on average 4% of all micro start-ups – create between 22% (the Netherlands) and 53% (France) of new jobs.
  • Business dynamism has been declining in most OECD countries and industries, and the most dynamic sectors – typically the digital-intensive ones – have experienced the largest decline.
  • Better policies in the area of bankruptcy procedures, contract enforcement, and civil justice efficiency can unleash the growth potential of young firms.
  • Start-ups are more exposed to policies than incumbents, especially in volatile and risky sectors, where more high-growth firms operate.

Icon for information. Icon by Google from www.flaticon.com The DynEmp project and data

The core DynEmp3 cross-country database provides a detailed portrait of the business structure and dynamics of 16 OECD countries plus Brazil and Costa Rica over the period 2001-2015. Since the first DynEmp data collection in 2013, there have been a number of refinements and additions to the collection, including the ability to track firm performance over time, the possibility to include information on ownership and trade status, a distinction between truly new firms and entry associated with mergers and acquisitions, and a focus on ICT sectors. Additional modules have been explored which study employment dynamics at the regional and local level, and provide a simplified version of the analysis suitable for countries without longitudinally-linked firm data. The database continues to be updated as new data becomes available and as additional countries join the DynEmp network.

DynEmp data is collected by the OECD through a network of affiliated researchers and national statistical offices with access to confidential, firm-level research data for a single country. The OECD provides code to harmonise differences in the data across countries, and to generate an analysis dataset capturing the dynamics and dispersion of employment across highly disaggregated groups of firms, by age, size, and industry. Local researchers and statistical agencies then apply the necessary steps to ensure that outputs meet specific confidentiality requirements and return the secure, micro-aggregated results to the OECD for analysis.

Current research within the DynEmp project focuses on documenting the trends and explaining the observed reduction in business dynamism across OECD countries over the last two decades, and examining the quality and inclusiveness of job created by young firms.


Magnifying glass icon Research and Analysis


Graph icon. Icon by Freepik from www.flaticon.com DynEmp Indicators

  • Entry rates, exit rates, and post-entry growth in highly digital-intensive vs. other sectors, by country and over time  | Data and graphs (xls)
  • Indicators on trends in business dynamism  | Data and graphs (xls)

Icon of a letter. Icon by Smashicons from www.flaticon.com  Contact

  • For more information, or to contribute data to the DynEmp database, contact us.

 

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Co-funded by the Horizon 2020
Research and Innovation Programme of the European Union

 

This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 811181.

The European Commission is not responsible for any use that may be made of the information produced by the project.