NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee

Robert W. Fairlie, Javier Miranda

NBER Working Paper No. 22428
Issued in July 2016
NBER Program(s):Productivity, Innovation, and Entrepreneurship

Job creation is one of the most important aspects of entrepreneurship, but we know relatively little about the hiring patterns and decisions of startups. Longitudinal data from the Integrated Longitudinal Business Database (iLBD), Kauffman Firm Survey (KFS), and the Growing America through Entrepreneurship (GATE) experiment are used to provide some of the first evidence in the literature on the determinants of taking the leap from a non-employer to employer firm among startups. Several interesting patterns emerge regarding the dynamics of non-employer startups hiring their first employee. Hiring rates among the universe of non-employer startups are very low, but increase when the population of non-employers is focused on more growth-oriented businesses such as incorporated and EIN businesses. If non-employer startups hire, the bulk of hiring occurs in the first few years of existence. After this point in time relatively few non-employer startups hire an employee. Focusing on more growth- and employment-oriented startups in the KFS, we find that Asian-owned and Hispanic-owned startups have higher rates of hiring their first employee than white-owned startups. Female-owned startups are roughly 10 percentage points less likely to hire their first employee by the first, second and seventh years after startup. The education level of the owner, however, is not found to be associated with the probability of hiring an employee. Among business characteristics, we find evidence that business assets and intellectual property are associated with hiring the first employee. Using data from the largest random experiment providing entrepreneurship training in the United States ever conducted, we do not find evidence that entrepreneurship training increases the likelihood that non-employers hire their first employee.

download in pdf format
   (383 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22428

Forthcoming in Journal of Economics & Management Strategy citation courtesy of

Users who downloaded this paper also downloaded* these:
Gottlieb, Townsend, and Xu w22446 Experimenting with Entrepreneurship: The Effect of Job-Protected Leave
Pekkala Kerr and Kerr w22385 Immigrant Entrepreneurship
Kaplan and Lerner w22500 Venture Capital Data: Opportunities and Challenges
Davis, Haltiwanger, Jarmin, Krizan, Miranda, Nucci, and Sandusky w13226 Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes
González, Marshall, and Naidu w22483 Start-up Nation? Slave Wealth and Entrepreneurship in Civil War Maryland
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us