The Importance of Startups in Job Creation and Job Destruction
Tim Kane
First published July 2010
By now it is well understood that firms large and small are continuously and simultaneously destroying and creating jobs. However, beyond the job churn at existing firms, there is a dynamic in firm birth that seems to be very important for understanding job creation. Put simply, this paper shows that without start-ups, there would be no net job growth in the U.S. economy. This fact is true on average, but also is true for all but seven years for which the United States has data going back to 1977.