How Large are the DirectEmployment Effects of NewBusinesses?- An Empirical Investigation -

We analyze the development of employment in start-up cohorts, which is the direct grossemployment effect of the new businesses. The data is for West Germany and covers the 1984-2002 period. While total employment in the cohorts remains above the initial level inmanufacturing, we find a pronounced decline of employment below this level in the servicesector. Only a small fraction of the firms create a considerable amount of jobs. Thecontribution that the start-up cohorts of the 1984 - 2002 period made to total employment in2002 is nearly three times as high in services as in manufacturing.