Garage Entrepreneurs or just Self-Employed? An Investigation into Nonemployer Entrepreneurship

Adela Luque and Vitaliy Novik

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: Nonemployers, businesses without employees, account for most businesses in the U.S. yet are poorly understood. We use restricted administrative and survey data to describe nonemployer dynamics, overall performance, and performance by demographic group. We find that eventual outcome – migration to employer status, continuing as a nonemployer, or exit – is closely related to receipt growth. We provide estimates of employment creation by firms that began as nonemployers and become employers (migrants), estimating that relative to all firms born in 1996, nonemployer migrants accounted for 3-17% of all net jobs in the seventh year after startup. Moreover, we find that migrants’ employment creation declined by 54% for the cohorts born between 1996 to 2014. Our results are consistent with increased adjustment frictions in recent periods, and suggest accessibility to transformative entrepreneurship for everyday Americans has declined.

Keywords: nonemployers; business owner demographics; nonemployer transition to employer; business dynamism; startups; entrepreneurship (search for similar items in EconPapers)
JEL-codes: D22 L21 L25 L26 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-bec, nep-ent and nep-sbm
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https://www2.census.gov/library/working-papers/2024/adrm/ces/CES-WP-24-61.pdf First version, 2024 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:24-61

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