Research Paper 5/2017
This staff research paper explores the dynamics of entrepreneurship in Australia and their evolution over time. It uses a large firm-level dataset covering years 2002 to 2015.
- The rate of firm entry in Australia has been declining since 2005.
- Firms that entered after 2005 also face more risks and a higher probability of exit.
- Small young firms are the main engine of jobs growth in Australia, and a declining number means lower job creation.
- Productivity growth can also be slowing down as a result of diminishing resources reallocation to small firms.
- However, the potency of job creation among individual young firms has not subsided and is even increasing.
- There is space for policy consideration to assist entrepreneurs, once the reason behind the declining trend is understood.
Author: Sasan Bakhtiari