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Econresearch - Patel Harsh Patel Professor Burnette...

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Patel 1 Harsh Patel Professor Burnette Economics of Human Resources 15 November 2010 Startups Create Most New Jobs Arguably, Startups are among the leading drivers of job creation in many economies such as the United States. This is based on the annual net job creation and the central role in the business world. The main focus of many economies is to create employment to enhance economic growth. Job creation seems to be the only solution to tackle the ever increasing unemployment rates in many economics (David and Alan 238) Startups come in handy, given that they are among the leading organs of job creation. According to a research carried out by the EW Kauffman Foundation in the US. Approximately two-thirds of new jobs created were attributed to startups (Harris 3). As a matter of fact, new companies generally create new jobs within the business circle. Since inception, a business entity usually begins by employing new individuals and as time goes by, the job creation spirit evaporates over the entire business period. Eventually, the firm ages as it nears to exit the market. During the last times, job creation slightly reduces as evidenced from destroying jobs. Statistics from the study by Kuaffman Foundation shows that job creation by new firms is very high from year one to year five. However, the scenario begins to change after this period because business objectives take the center role (Higginbotham). On the other hand, new business establishments are known to be very volatile given that majority of them do not see the achievement of their intended objectives. Majority of them
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Patel 2 hardly reach the fifth year. Ironically, this is contrary to the factor of Startups playing a center role in job creations. The matter of concern is that the ratio of firm survival rates is directly proportional to the number of jobs created. Admittedly, Startups are mostly affected by the impacts of economic recessions and crises thereby hindering the increment in the number of jobs created. Ironically, jobs created by the Startups are more reliable during economic recessions as compared to those created by the aged firms, which tend to be highly sensitive to economic fluctuations (Higginbotham). Therefore, in order for economics to be able to achieve their macroeconomic goals of job creation, they must support startup firms given that they play a major role in the creation of new jobs. This paper is limited to the validation of the statement that Startups play a key role in the creation of new jobs. Ideally, it discusses the nature of startups, research that has been undertaken so far concerning job creations by Startups and key roles played by these firms. Moreover, it will examine the business cycle with regard to the time a business is created and the number of jobs as well as the same scenario five years later after the firm becomes fully operational. Additionally, the paper will also compare these firms with those firms that are already established. Findings will be used to validate claims of research questions (such as: are
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This note was uploaded on 02/17/2011 for the course CISC 113 taught by Professor Doreencornell during the Spring '10 term at bucks.edu.

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Econresearch - Patel Harsh Patel Professor Burnette...

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