The financial crisis of 2007-08 resulted in widespread job losses, and the task of recovery has proven to be difficult. While the importance of entrepreneurship is well established in economic theory as well as political discourse, there has been a long-term decline in the number of jobs created by newly established firms in the United States.
A 2011 study from the Federal Reserve Bank of Atlanta and Pennsylvania State University, “Self-employment and Local Economic Performance: Evidence from U.S. Counties,” examines the effects of self-employment levels on income growth, job creation and poverty alleviation in metro and non-metro counties in the United States over a period of 30 years (1970-2000). The study, published in Papers in Regional Science, focuses on the significance of what the federal government categorizes as non-farm proprietors (NFP). “Although they are not a direct measure of entrepreneurship,” the authors state, “NFPs are full-time or part-time owners of small businesses who organize and operate a business, take risks and earn profits or incur losses.”
Key findings include:
“The findings provide strong empirical support for the pro-small, local business prescription to accelerate local economic growth and reduce countywide poverty,” the authors conclude. “The results strongly suggest that policy-makers and local economic development practitioners should seriously consider strategic investments in NFPs, and that this growing sector of the economy warrants at least as much attention as industrial recruitment efforts which seek economic salvation from outside the county or state.”
Tags: employment, economy, entrepreneurship, small business