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

Author

Listed:
  • Adela Luque
  • Vitaliy Novik
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.

Suggested Citation

  • Adela Luque & Vitaliy Novik, 2024. "Garage Entrepreneurs or just Self-Employed? An Investigation into Nonemployer Entrepreneurship," Working Papers 24-61, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:24-61
    as

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    File URL: https://www2.census.gov/library/working-papers/2024/adrm/ces/CES-WP-24-61.pdf
    File Function: First version, 2024
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    nonemployers; business owner demographics; nonemployer transition to employer; business dynamism; startups; entrepreneurship;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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