Job Creation and Job Types: New Evidence From Danish Entrepreneurs

We extend earlier analyses of the job creation of start-ups vs. established firms by taking into consideration the educational content of the jobs created and destroyed. We define educationspecific measures of job creation and job destruction at the firm level, and we use these to construct a measure of “surplus job creation” defined as jobs created on top of any simultaneous destruction of similar jobs in incumbent firms in the same region and industry.
Using Danish employer-employee data from 2002-7, which identify the start-ups and which cover almost the entire private sector, these measures allow us to provide a more nuanced assessment of the role of entrepreneurial firms in the job-creation process than previous studies. Our findings show that while start-ups are responsible for the entire overall net job creation, incumbents account for more than a third of net job creation within high-skilled jobs. Moreover, start-ups “only” create around half of the surplus jobs, and even less of the high-skilled surplus jobs. Finally, our approach allows us to characterize and identify differences across industries, educational groups and regions.