Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary For young firms, the effect of business training on hiring a first employee remains ambiguous, and more research is needed to understand the relationships behind job creation by entrepreneurs. A brief description of the project's goals and its current state Abstract <p>One of the most important decisions that an entrepreneur has to make is whether to hire employees. Longitudinal data from the Kauffman Firm Survey (KFS) and the Growing America through Entrepreneurship (GATE) Experiment are used to provide some of the first evidence in the literature on the determinants of taking the leap from a non-employer to employer firm. Several interesting patterns emerge regarding the dynamics of non-employer startups hiring their first employee. Many non-employer startups hire their first employee in the first three years of existence. After that period of time and through the first seven years, only a few additional firms make the switch from non-employer to employer. An examination of the demographic characteristics of owners reveals that non-employer startups owned by African-Americans have similar rates of hiring their first employee by each follow-up year whereas Asian-owned and Hispanic-owned startups have higher rates of hiring their first employee than white-owned startups. Female-owned startups are roughly 10 percentage points less likely to hire their first employee by the first, second and seventh years after startup. The education level of the owner is not found to be associated with the probability of hiring an employee. Using data from the largest random experiment providing entrepreneurship training in the United States ever conducted, I also find some suggestive evidence that entrepreneurship training might increase the likelihood that non-employers hire their first employee. Another interesting finding is that the revenue levels of young firms do not strongly predict when they hire their first employee but business assets and intellectual property are associated with hiring the first employee.</p> The full abstract of the study, if available Links https://onlinelibrary.wiley.com/doi/full/10.1111/jems.12176 Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question What are the dynamic patterns of hiring employees among startups in their first few years of existence? What are the demographic and human capital characteristics of entrepreneurs that are associated with making the decision to hire their first employee in the first several years of operation? Can an alternative form of human capital, entrepreneurship training, help overcome some of the barriers to hiring employees? What dynamic business conditions are associated with hiring the first employee? Sample Trial population and sample selection At over 4,000 participants, the GATE experiment is the largest-ever randomised evaluation of entrepreneurship training and assistance. While there were few restrictions on applicants, the focus of this study is on the non-employer business owners participating. GATE was administered by the U.S. Small Business Administration between September 2003 and July 2005 in cities of varying sizes, serving both urban and rural populations. Individuals interested in applying to receive entrepreneurship training through the programme had to first attend an orientation meeting at a One-Stop Career centre. Applicants were informed that space is limited and lottery would decide who is selected for the programme. Applicants were then randomly assigned to the treatment or control group with equal probability. The treatment group was offered an array of free services. The control group were offered no services or referrals to other programmes. Number of treatment groups Size of treatment groups 174 business owners (non-employers at baseline of GATE experiment) Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description The treatment group had access to a set of free individualised services beginning with a 1-on-1 assessment meeting to determine specific training needs. Training was provided by experienced consultants in classroom (introductory, intermediate or advanced levels) or in a 1-to-1 setting, both targeting a variety of subject areas. Rounds of data collection Baseline data collection and method Baseline data was collected through the application form and initial survey. This included owner demographics, work/business experience, current business ideas, as well as detailed business characteristics. Data collection method and data collected Evaluation Outcome variables <p>Hiring decisions over time. Employment of the business at the time of follow-up surveys. Probability of hiring the first employee by each of the follow-up waves.</p> Results <p>Does entrepreneurship training help owners hire their first employee? Although entrepreneurship training does not increase the likelihood a non-employer firm hires an employee at each follow-up wave, it might increase overall employment levels.</p> Intervention costs $1,321 per person (business owner) Cost benefit ratio Reference Fairlie, R. W., & Miranda, J. (2017). Taking the leap: The determinants of entrepreneurs hiring their first employee. Journal of Economics & Management Strategy, 26(1), 3-34. Citation for use in academic references
