| Abstract: | This paper uses some simple microeconomic tools to explain the net effect on employment of different types of new firm formation. The first section of the paper examines the way in which actual employment in new firms has been calculated in recent empirical studies. The next section looks at the relationship between the actual and net employment effects of formations and argues that the former may not be a good guide to the latter. The final section examines the policy implications of the analysis. |
