Do micro start-ups fuel job creation? Cross-country
evidence from the DynEmp Express database
Peter N. Gal
Accepted: 7 June 2016 / Published online: 21 July 2016
Ó Springer Science+Business Media New York 2016
Abstract Exploiting a novel database recently built
from national business registers by the OECD with the
support of an international network of experts, this
paper investigates the growth dynamics of micro-ﬁrms
(employing less than ten workers) across 16 countries.
Results show that only a small proportion of micro-
ﬁrms manage to grow beyond ten employees, but those
contribute disproportionately to overall job creation.
Econometric analysis focusing in particular on the role
of age conﬁrms that young micro-ﬁrms—especially
those below 3 years of age—are much more likely to
grow above ten employees than older ﬁrms. These
ﬁndings are remarkably stable over the three time
periods considered (2001–2004, 2004–2007, and
2007–2010), i.e., also during the Great Recession.
Keywords Micro-ﬁrms Á Start-ups Á Employment
JEL Classiﬁcations D22 Á L25 Á L26
1 Introduction: up-or-out dynamics
and the importance of start-ups for job creation
Start-ups are considered to be an important driver of
job creation in all countries, as a signiﬁcant share of
jobs is created by new entrants; furthermore, incum-
bent young ﬁrms are also generally net job creators
(Criscuolo 2014a, b; Lawless 2014). However, it is
also known that a signiﬁcant share of them die within
the very ﬁrst years of life (Anyadike-Danes et al.
2013). Therefore, the net contribution of start-ups to
job creation needs to take into account both of these
phenomena that characterize the ‘‘up-or-out’’ dynam-
ics of young ﬁrms’ growth (Haltiwanger et al. 2013).
Cross-country evidence on the growth dynamics of
start-ups is extremely limited (with Anyadike-Danes
et al. 2013 being a noteworthy exception). This paper
investigates the growth dynamics of micro-ﬁrms, i.e.,
ﬁrms employing less than ten workers, over the time
periods 2001–2004, 2004–2007, and 2007–2010
across 16 countries.
We look in particular at the
Small Bus Econ (2017) 48:393–412
Disclaimer The views expressed in these papers are those of
the authors and do not necessarily reﬂect those of the OECD or
of the governments of its member countries.
C. Criscuolo Á C. Menon (&)
Science, Technology and Innovation Directorate, OECD,
2, rue Andre
Pascal, 75775 Paris Cedex 16, France
P. N. Gal
Economics Department, OECD, 2, rue Andre
75775 Paris Cedex 16, France
Included countries are Austria, Belgium, Brazil, Canada,
Finland, France, Hungary, Italy, Japan, Luxembourg, the