A note on self-employment rates and job generation in metropolitan areas

Martin Carree, Department of Organization and Strategy, Maastricht University

Many regional development policy initiatives assume that entrepreneurial activities promote economic growth. Empirical research has presented rationale for this argument showing that small firms create proportionally more new jobs than large ones. However, little research has been performed on the issue of net job generation at the urban level. This paper investigates to what extent U.S. metropolitan areas in the 1969-1999 period characterized by relatively high rates of self-employment also have shown relatively high rates of subsequent total employment growth. The analysis corrects for the size and sectoral composition of the metropolitan area. It finds the relationship between self-employment rates and subsequent total employment growth to be positive on average but to weaken over time.

Date: 21 October-00 0000