Considerable policy interest centres on entrepreneurship as a means of employment creation. This is one of two labour market-related topics explored in this chapter, the other being labour supply. Section 8.1 briefly outlines some evidence on employment by entrepreneurs, the factors that appear to affect it and the contribution made by small firms to aggregate job creation. Section 8.2 describes the nature of work performed by entrepreneurs, their labour supply, their changing participation rates as they age and their retirement behaviour.

Entrepreneurs as employers

Evidence about self-employed ‘job creators’

In most countries only a minority of self-employed people hires other workers. For example, according to Bregger (1996), only 21 per cent of self-employed Americans hired any employees in 1995. Of these, a third had only one employee, and only one-seventh hired six or more. Of those who had held second jobs in which they were self-employed, only 7 per cent hired employees. Also, Kuhn and Schuetze (2001) found that only 32 per cent of male and 22 per cent of female self-employed owners of established Canadian businesses over 1982–98 hired any paid help. The story is similar in the UK, where the 1991 BHPS reveals that just over 30 per cent of self-employed people hired any other workers. According to Moralee (1998), employment-creating self-employment declined by about 7 per cent in the UK between 1992 and 1997. Lin, Picot Compton (2000) and Kuhn and Schuetze (2001) noticed a similar trend in Canada.