Job Creation by the Self-Employed: The Roles of Entrepreneurial and Financial Capital

Posted: 24 Nov 2009

See all articles by Andrew Henley

Andrew Henley

Cardiff Business School, Cardiff University; IZA Institute of Labor Economics

Date Written: 2005

Abstract

The factors that allow self-employed individuals to create small- to medium-size businesses that employ other individuals are examined.Factors considered include housing wealth (i.e., capital assets), parental background, educational level, local market conditions, and age of the self-employed. Using data collected from the British Household Panel Survey from 1991 to 1999, which encompasses approximately 5,000 households, the statistical analysis shows a strong correlation between housing wealth and employment generation.The housing wealth is often used as collateral to secure business financing.Further, the results indicate that entrepreneurs with a self-employed parent are more likely to employ others in their business.The greater the educational attainment, the more likely the self-employed are to employ others. Yet another finding is that at age 47.8, the self-employed are at the peak age for employment creation.These factors prove to be very important, as only one-third of the self-employed at any given time are able to create jobs for others.Furthermore, of those who are able to create jobs, only 6 to 7% are able to create jobs for ten or more people.Potential policy considerations are also discussed. (SRD)

Keywords: Experimental/primary research, British Household Panel Survey (BHPS), Human capital, Capital assets, Parents, Job creation, Self-employment, Firm growth

Suggested Citation

Henley, Andrew, Job Creation by the Self-Employed: The Roles of Entrepreneurial and Financial Capital (2005). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1509210

Andrew Henley (Contact Author)

Cardiff Business School, Cardiff University ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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