Do Entrepreneurs Create Jobs?

Many countries support the creation of new firms. Such policy is based on the presumption that the total number of jobs increases when a person moves from unemployment or regular employment to self-employment. In this paper the link between self-employment and overall employment is analyzed. The empirical analysis, based on panel data of Swedish counties from 1976–1995, pays particular attention to simultaneity issues. The results suggest that self-employment may have a significant positive effect on overall employment.