Who (or What) Creates Jobs? The Quest for the Engines of Employment

August 27, 2010 by Emsi Burning Glass

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Mark Thoma and Catherine Rampell point to a new study that argues that the age (not the size) of a business is the key factor in their employment growth. Thoma has a great deal of the background and conclusion on his site. From the conclusion:

…we show that these large, mature firms account for almost 40 percent of job creation and destruction…, the share of jobs created and destroyed by different groups of firms is roughly their share of total employment. However, this is hardly the whole story as much of the analysis in the paper shows that some groups disproportionately create and destroy jobs. For example, firm startups account for only 3 percent of employment but almost 20 percent of gross job creation. (our emphasis)

And the key to young business growth may be found here, in an article that Andy Grove, former CEO of Intel Corp., wrote for Bloomberg. In it, he writes:

Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.