One reason why joblessness is so bad and so persistent

There is a new Kaufmann study by E.J. Reedy and Bob Litan and it echoes some of the themes raised in TGS:

The United States appears to be suffering from a long-term leak in job creation that pre-dates the recession and has the potential to persist for an unknown time. The heart of the problem is a pullback by newly created businesses, the economy’s most critical source of job creation, which are generating substantially fewer jobs than one would expect based on past experience.

Look at Figure A in the pdf, job creation from start-ups has been falling since the 1980s.  And from the conclusion:

…the conclusions from the data analyzed here are pretty clear, and they are not heartening. Employer businesses have been starting in fewer numbers, with fewer employees, growing slower, and, therefore, generating increasingly fewer new jobs for the U.S. job market.

Read the whole thing.

Addendum: Arnold Kling comments.


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