Determinants of Spanish Firms' Life Cycle and Job Creation: A Pseudo-Panel Approach

This paper examines the role of human capital, individual entrepreneurial traits and the business environment on firms’ life cycle and on job creation in Spain. For this purpose, we have constructed a pseudo-panel, by using the Global Entrepreneurship Monitor survey over the period 2001-2008. We have found that the creation, maturity and survival of firms were aided by the availability of bank credit and the large immigration inflows that Spain received over this period. However, of these two factors, only bank credit had a positive effect on the creation of jobs and on improving expectations of job expansion. The relatively high levels of youth unemployment experienced even before the crises of 2008 hurt the firm’s chances of maturity and survival. The results also suggested that the gender gap in entrepreneurial activities had narrowed. In relative terms, women with higher levels of education were more likely to create mature firms than men. Based on the empirical findings and those of related literature, the paper offers policy recommendations to foster a sustainable entrepreneurial sector capable of contributing to the recovery of the Spanish economy.