The employment dynamics of Australian entrepreneurship

This research paper is the first in a series to explore the dynamics of employment and productivity growth in Australian firms using the newly created Expanded Analytical Business Longitudinal Database. This paper examines the contribution of young firms, particularly start-ups, to net job creation in the Australian economy between 2001–2011. The results show that young SMEs contribute disproportionately to job creation. Young SMEs (firms aged 0–5 years) made the highest contribution to net job creation in Australia (40 per cent) and start-up activity (firms aged 0–2 years) is responsible for most of this growth. Australia’s start-up activity is high but they tend to reach smaller sizes relative to other OECD countries examined to date. A very small fraction (3 per cent) of start-ups drive the majority (77 per cent) of their post-entry job creation. These high growth start-ups also show superior sales and profit performance but lower labour productivity performance compared to other surviving start-ups.