Review on the Effects of New Firm Formation on Employment

Innovation and start-up has become the impulse of transition and upgrade of China’s industrial structure. The emergence of many start-ups will change the situation and the existing enterprises create new employment. In this way, the relation between start-ups and job creation could affect employment in the long run when industrial structures are adjusted. Empirical researches have proven that the effects of new firm formation on employment last for a long time. Serious competition has emerged between new firms and between new firms and old firms. Only highly innovative firms survive. The employment rate increases. This study reviews the theoretical and empirical researches on new firm formation and employment from home and abroad. And this study provides suggestions for policy-making on the issue of new-firm formation accelerating employment increase.