Entrepreneurship, job Creation, and Wage Growth

This paper analyses the importance of entrepreneurs for job creation and wage growth. Relying on unique data that covers all plants, firms and individuals in the Danish private sector, we are able to distil a number of different measures of entrepreneurial plants from the set of new plants, including measures that much more precisely capture the "truly new” or "entrepreneurial” plants than in previous studies. Using these data, we find that while new plants in general account for one third of the gross job creation in the economy, entrepreneurial plants are responsible for between 15% and 25% of this, and thus only account for up to 8% of total gross job creation in the economy. However, entrepreneurial plants seem to generate more additional jobs than other new plants in the years following entry. Finally, the jobs generated by entrepreneurial plants are to a large extent low-wage jobs, as they are not found to contribute to the growth in average wages. However, this insight varies across the different types of entrepreneurial plants.na