Working Paper No. 1059

Jobs Incorporated: Incorporation Status and Job Creation

Published: March 6, 2015Pages: 26Keywords: Entrepreneurship; Incorporation; Job creation; Occupational choice; Self-employment; Stars and misfitsJEL-codes: J24; L26
Published version

Jobs Incorporated: Incorporation Status and Job Creation Thomas Åstebro and Joacim Tåg


Recent research has shown that entrepreneurs who start incorporated firms are fundamentally different from entrepreneurs who start sole proprietorships. This difference suggests that incorporation status may distinguish the self-employed with no ambition to hire from entrepreneurs who plan to hire others.

In this paper, we show that this intuition is correct. Using a dataset with over 24 million observations and more than 230,000 entries into entrepreneurship, we show that newly incorporated entrepreneurs create 50% more jobs than sole proprietors. The result derives from the fact that high-ability individuals are more likely to form incorporated ventures. While there is selection from both tails of the ability distribution into starting incorporated ventures – that is, both stars and misfits start corporations – it is primarily individuals with low ability, the misfits, who start sole proprietorships.

This does not, however, mean that the aggregate number of jobs created by the incorporated is higher. Since more entrepreneurs in total become sole propri etors, the sole proprietors initially contribute more to aggregate job creation than the incorporated.

Joacim Tåg

Contact

Ph: +46 8 665 4524
joacim.tag@ifn.se

Thomas Åstebro

Contact

Ph: +33 1 39677483
astebro@hec.fr

Integrating Immigrants into the Nordic Labour Markets

An Overall Perspective

Pages-from-2019-Calmfors-Gassen---Integrating-Immigrants-into-the-Nordic-Labour-Markets.gif

Denmark, Finland, Norway and Sweden face similar problems of integrating large groups of immigrants, especially low-educated ones from outside the EU, into their labour markets. In this volume, edited by Lars Calmfors, IFN, and Nora Sánchez Gassen in cooperation with researchers from across the Nordic Region analyse how labour market integration of immigrants can be promoted. 

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