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Job Flows

Paper Session

Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM

Pennsylvania Convention Center, 106-A
Hosted By: Society of Government Economists
  • Chair: James R. Spletzer, U.S. Census Bureau

The Career Implications of Start‐up Work Experience

Javier Miranda
,
U.S. Census Bureau
Kristin Sandusky
,
U.S. Census Bureau
Martha Stinson
,
U.S. Census Bureau

Abstract

"Young and small firms account for a decreasing share of activity in the U.S. economy, giving rise to concerns about the impact this decline may have on innovation and productivity growth in the U.S. An area that has received little attention is the impact this decline may have on the career opportunities of workers employed at these firms. Underlying this concern is the premise that workers at these firms acquire skills they would not obtain otherwise and that these firms provide opportunities to nascent entrepreneurs that will serve them well at some future time. We contribute to this discussion by exploring the impact of working at a young firm on a worker’s career, particularly through earnings and the probability of starting a business. We consider two possibilities. First, jobs at young firms may be no different in this regard from jobs at large established firms. In this case, young firm employment impacts a worker’s future earnings primarily through total work experience, and workers should not be concerned about declining numbers of jobs at young firms as long as these jobs are being replaced by jobs at older firms. If, on the other hand, young small firms offer more opportunity to build or reveal worker aptitudes though multidimensional training, then earnings at subsequent jobs may be higher relative to workers who worked only at more established firms. In addition, workers at young firms with more entrepreneurial abilities may be more likely to become higher-earning entrepreneurs themselves later in life. If this is true, the consolidation of activity into older and larger businesses may generate a cycle of declining entrepreneurship and contribute to lower future
productivity for workers. We seek to identify the causal impact of the composition of old and young jobs on a worker’s subsequent earnings and employment choices using longitudinal Social Security earnings records for CPS respondents matched to longitudinal IRS-Census business
data. These data allow us to follow a large sample of individuals from age 15 to their early thirties, tracking their job choices and earnings as they age. We find that employment at young firms has a positive impact on a worker’s subsequent earnings, even after controlling for total work experience and person and job characteristics. We find evidence that young firm experience may differentially impact workers' propensities for business ownership and ownership earnings.. "

Job Ladders and Growth in Earnings, Hours, and Wages

Joyce K. Hahn
,
U.S. Census Bureau
Henry R. Hyatt
,
U.S. Census Bureau
Hubert P. Janicki
,
U.S. Census Bureau

Abstract

We consider the role of procyclical employment growth and employer-to-employer transitions in the evolution of earnings, hours, and wages in the U.S. economy using matched employer-employee data for years 1994-2014. We document the relationship between changes in employment outcomes and the unemployment rate, both in the underlying microdata as well as in aggregate, and confirm that earnings adjust to the unemployment rate through both an hours channel and a wage channel, but primarily through the former. We highlight the role of employer-employee match effects in the evolution of aggregate earnings, hours, and wages: during expansions, new hires out of no employment start with especially low employer-employee match effects, while at the same time employer-to-employer flows contribute to higher employer-employee match effects - and the latter channel is more pronounced along the hours dimension.

Self-employment Duration of Opportunity and Necessity Entrepreneurs: A Closer Look at Female-male Differences

Adela Luque
,
U.S. Census Bureau
Maggie R. Jones
,
U.S. Census Bureau

Abstract

"A strand of the self-employment literature suggests that those ‘pushed’ into self-employment out of necessity may perform differently from those ‘pulled’ into self-employment to pursue a business opportunity. Understanding these differences is important for economic growth and policy-making. Self-employment that leads to the establishment of a successful employer and/or innovative firm can be a conduit for job creation and an engine of economic growth. Self-employment may also serve as a tool to cushion economic downturns for those who would otherwise be unemployed.
While findings on self-employment outcomes by entrepreneur type are not unanimous, there is mounting evidence that performance outcomes differ between these two self-employed types. Another strand of the literature has found important gender differences in self-employment entry rates and outcomes. Using a unique set of data that links the American Community Survey to administrative records from Form 1040 and W-2 records, we bring together these two strands of the literature. We explore whether there are gender differences in self-employment duration of self-employed types. In particular, we examine the likelihood of self-employment exit towards unemployment versus the wage sector for five consecutive entry cohorts, from 2005 to 2009. Severely limited labor-market opportunities may have driven many in the recession cohorts to enter self-employment, while those entering self-employment during the boom may have been pursuing opportunities under favorable market conditions. To more explicitly test the concept of “necessity” versus “opportunity” self-employment, we also examine the wage labor attachment (or weeks worked in the wage sector) in the year prior to becoming self-employed.
Preliminary findings indicate that there are no gender differences in self-employment duration for male and female entrants with the lowest and the highest wage labor attachment prior to becoming self-employed. However, we do find gender differences for those who participated in part-time to full employment in the wage sector prior to self-employment entry. Relative to self-employed men, self-employed women in this group are more likely to exit self-employment towards unemployment if they entered self-employment during the economic boom. Further research is needed to understand why we find gender differences for this group in particular. Education and household-related labor supply factors may be at play."

High Growth Entrepreneurship

J. David Brown
,
U.S. Census Bureau
John S. Earle
,
George Mason University
Mee Jung Kim
,
George Mason University and U.S. Census Bureau
Kyungmin Lee
,
George Mason University

Abstract

Most start-up firms either fail or remain small throughout their lives, while a tiny fraction of entrants account for the bulk of job creation. These stylized facts have inspired a search for determinants of high job creating firms to inform policy. We investigate how founding owner and firm characteristics are associated with high job creation by following 37,000 start-ups from birth through seven years of age. The data on owner and firm characteristics are drawn from the U.S. Census Bureau’s 2007 Survey of Business Owners (SBO), and the employment time series for each firm in the 2007 entry cohort are constructed from the Longitudinal Business Database. We define high job growth as the top five percent of the entry cohort’s employment distribution. Unlike high growth metrics used elsewhere in the literature, this measure incorporates job creation occurring at startup (which accounts for the bulk of most firms’ job creation), and it is less sensitive to temporal shocks and arbitrary choices of growth periods and thresholds. Demonstrating the importance of startup size, we document a high degree of persistence in firms’ place in the size distribution from their startup quarter to age seven. Regressions show how associations between founder and firm characteristics and being in the top five percent are affected as additional factors are controlled for and as firms age. The results suggest that a lower frequency of having unrelated co-founders and/or lower startup financing help explain lower propensities to establish high growth firms by young, female, Hispanic, African American, veteran, less-educated, and novice entrepreneurs. Contrary to conventional wisdom, however, sectoral choice does not help to explain their lower performance. Firms founded by young, African-American, and graduate-degree holding entrepreneurs are less well represented in the top five percent of the startup employment distribution, but these differences become insignificant or are reversed (for graduate degree holders) by age seven.
Discussant(s)
Jamin Speer
,
University of Memphis
Marinos Tsigas
,
U.S. International Trade Commission
Sabrina Wulff Pabilonia
,
U.S. Bureau of Labor Statistics
Ryan Decker
,
Federal Reserve Board
JEL Classifications
  • J0 - General