Job Quality by Entrepreneurial Spinoffs

We study whether entrepreneurial spinoffs are important drivers of industry dynamics. More precisely, we investigate whether the quality of jobs in spinoff entrepreneurs are higher than for other entrepreneurs. We distinguish spinoff firms by different types and distinguish between growing and declining industry-region clusters. We find that spinoffs on average have higher wages, are more skill intensive, have higher sales per worker and are more productive than non-spinoff entrepreneurial firms. The differences are more pronounced in growing clusters. The results even hold when we control for worker heterogeneity and industry and region clusters characteristics. An important feature of the analysis is that we measure the entrepreneur as the organic new firm. By organic new firm, we mean new firms that are not the result of restructurings or organising existing or additional activities in a formally new firm.