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123 Monthly Lab. Rev. 3 (2000)
The Role of Entrepreneurship in U.S. and European Job Growth

handle is hein.journals/month123 and id is 635 raw text is: (i _- - : /iiii ... ....iiiiiiiii ... The role of entrepreneurship in U.S. and European job growth Entrepreneurial activity, which is higher in the United States than in Europe, is important to job growth, but not as job expansions in existing firms +7 ntrepreneurship, or the creation of a new I business or enterprise, is an integral and L3 significant activity in a growing job mar- ket. Just as new establishments are created, some existing ones expand, contract, or dissolve op- erations altogether. Countries that have the ca- pacity and wherewithal to accommodate high rates of business formation and dissolution will be best positioned to compete in world markets. To examine and monitor this process, govern- ment agencies in the United States and Eurostat from the European Union have collected data on the births and deaths of establishments.' Until recently, U.S. establishment-based longitudinal data were available only on the manufacturing sector. However, new longitudinal data on the births and deaths of establishments in both the United States and Europe are available. For the United States, the new data series, referred to as the Longitudinal Establishment and Enterprise Microdata (LEEM), provides information on the services sector as well as the manufacturing sec- tor. The Census Bureau collects the data for the U.S. Small Business Administration.2 European Union data are collected by its statistical arm, Eurostat, which developed a special data bank from existing statistical administrative data on small- and medium-size enterprises (smFs) in 1994 and 1995. In addition, the Global Enterprise Moni- tor project collected comparable data, using a very small sample of 10 industrialized countries to measure the level of entrepreneurship and to study the relationship between business creation as important and economic growth internationally. The results of the survey show a wide lead in the number of new businesses created in the United States.3 Although the Establishment and Enterprise Microdata and the Eurostat data on small- and medium-sized enterprises are not comparable, they each shed light on the nature and magni- tude of a very important component of job cre- ation-entrepreneurship. This article uses the Establishment and Enterprise Microdata and the international databases to determine the role of entrepreneurship in job growth for the United States and Europe. The crux of the article examines the births, deaths, expansions, and contractions of estab- lishments by size and industry to determine the net effects on job growth in the 1990s. The focus is on service sector industries, which led employ- ment growth in the United States. Beginning with a description of the data, this article notes that some incompatibilities suggest that it is better to analyze U.S. data separately from European Union data. The article also provides a sectoral over- view of the U.S. and European Union job markets to set in perspective the role of entrepreneurship in job creation. The results from the Global Entre- preneurship Monitor project conclude the article. Tracking and counting Since 1991, the U.S. Small Business Administra- tion has contracted with the Census Bureau to produce comprehensive and timely data of U.S. Monthly Labor Review July 2000 3 Robert W. Bednarzik Robert W. Bednarzik is a senior economist at the Bureau of International Labor Affairs, U.S. Depart- ment of Labor.

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