1. 1 1 Workshop on Improving Statistics on SME's and Entrepreneurship, Paris, 17-19 September 2003 Differences in entry and exit in European countries – findings and impact of methodological differences NICOLA BRANDT Economic Analysis and Statistics Division Organisation for Economic Co-operation and Development

2. 2 2 This presentation Describes the findings from some recent OECD work on firm entry and exit, survival and growth using new cross-country data from Eurostat. Discusses some of the methodological difficulties associated with international business demographics data. Draws conclusions and provides an outlook on OECD work linking firm dynamics to economic performance

3. 3 3 Results of entry rate regressions Indicates significance at the ***1 %, ** 5 %, * 10 % level Denmark is the reference

4. 4 4 The cross-country variation in entry rates is mainly due to ICT-related industries Country-specific ICT-industries effects

5. 5 5 …which are particularly dynamic Indicates significance at the ***1 %, ** 5 %, * 10 % level Manufacture of food & beverages is the reference Fixed effects for selected industries

6. 6 6 Entry and exit are highly correlated across industries Cross-industry correlation of entry and exit

7. 7 7 New firms are small - but results differ between Eurostat and OECD data... Average size of entering firms

8. 8 8...because firms without employees play an important role in both entry and exit Entry and exit: proportion of firms with less than five employees

9. 9 9 …few large firms enter and exit the market Entry: proportion of firms with more than 20 employees

10. 10 … especially when entry and exit are cleaned from other demographic events Exit: proportion of firms with more than 20 employees

11. 11 Results of hazard rate regressions Indicates significance at the ***1 %, ** 5 %, * 10 % level Denmark is the reference country 1-4 employees is the reference size class

12. 12 Few new firms survive, but those that do often grow very fast Two-year employment gains among surviving entrants

13. 13 Conclusions Thresholds and the ability to identify genuine firm entry and exit can affect results. Hazard rates differ considerably across countries, while differences in entry rates are sizeable only among ICT-related industries. This indicates that policy may be important mainly for firm survival and for entry in young and dynamic sectors. To judge whether high firm entry, growth or survival are desirable, the link with economic performance has to be studied. There is ongoing OECD work on this.