Interfusion’s active involvement through its in-house WhatIF Incubator (https://interfusionservices.com/interfusion-services-incubator/) has reinforced to us the notion that entrepreneurs do indeed create more employment than their counterparts, relative to their size. This remains true when one accounts for the higher dissolution rate among entrepreneurial, i.e., young and small firms, which destroys jobs. More specifically, the net contribution of entrepreneurs to employment creation relative to their counterparts is positive.
However, the net job creation of entrepreneurs goes along with a relatively high job destruction rate, leading to less job security and a more volatile process of employment creation. Hence, entrepreneurs do create more jobs, but they do so in a rather dynamic way, which is disadvantageous for the stability of the labor market.
Moreover, the quality of the jobs created by entrepreneurs is lower than for the counterparts. This is, among others, due to the fact that entrepreneurs tend to hire employees with lower levels of human capital than other firms. However, even if one accounts as much as possible for all kinds of differences between entrepreneurial and other firms, such as the complementarity of capital and skills, and the differences in returns to skills that are paid to employees, an unexplained wage premium for employees in counterpart firms remains.
Even though, entrepreneurs pay not only lower wages, but offer fewer benefits also, apparently they offer other intangible benefits to their employees because their employees are more satisfied with their (lower paid and less secure) jobs than the employees of their counterparts.