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The Employment Contribution of Small and Medium-sized Enterprises According to the EU-definition First Evidence Based on the IAB-Establishment-Panel for Germany

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Author Info

  • Dirk Engel

    ()
    (Rheinisch-Westfälisches Institut für Wirtschaftsforschung e.V. (RWI Essen))

  • Michaela Trax

    ()
    (Ruhr Graduate School in Economics, c/o Rheinisch-Westfälisches Institut für Wirtschaftsforschung e.V. (RWI Essen))

Abstract

Statements emphasizing the major contribution of the small and medium sized enterprises (SMEs) for net job creation are quite frequent. Concerning the current definition of SMEs provided by the European Commission (EC), this paper makes a first attempt to approximate SMEs’ contribution to net employment change based on the IAB-Establishment Panel Data over the years 1998 to 2005 for the whole private economy. Due to sufficient data, independent oneplant firms with less than 250 employees may approximate the group of SMEs according at best. Comparisons with the firm-level Amadeus database validate the suitability of the IABestablishment panel data for calculation of the SMEs’ employment share, as long as one controls for the establishments’ independence status. The employment share lies about fifty percent. As a matter of fact, the employment share of affiliated SMEs increases over time. Furthermore, independent small plants do not show higher net employment change rates than neither affiliated plants nor middle-sized and large plants. The results reinforce once again the impression that empirical evidence for the assumed superiority of SMEs, is very weak. Further research should mention the role of ownership and firms venturing on the level of firm as well as for the economy at all in more detail.

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Bibliographic Info

Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 228 (2008)
Issue (Month): 1 (February)
Pages: 64-83

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Handle: RePEc:jns:jbstat:v:228:y:2008:i:1:p:64-83

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Keywords: Employment; SME; corporate networks; panel data;

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References

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  1. Dirk Engel & Georg Metzger & Michaela Niefert & Daniel Skambracks, 2004. "Der Beschäftigungsbeitrag kleiner und mittlerer Unternehmen," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 38, 01.
  2. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
  3. Joachim Wagner, 2006. "Politikrelevante Folgerungen aus Analysen mit Firmendaten der Amtlichen Statistik," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(3), pages 359-374.
  4. Davis, Steven J & Haltiwanger, John & Schuh, Scott, 1996. " Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Small Business Economics, Springer, vol. 8(4), pages 297-315, August.
  5. Bauer, Thomas K. & Schmucker, Alexandra & Vorell, Mathias, 2008. "KMU und Arbeitsplatzdynamik : eine Analyse auf Basis der Beschäftigten-Historik-Datei," IAB Discussion Paper 200802, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  6. Grotz, Reinhold & Brixy, Udo, 2002. "Entry-rates, the share of surviving businesses and employment growth: differences between West and East Germany since unification," ERSA conference papers ersa02p175, European Regional Science Association.
  7. Michael Fritsch & Antje Weyh, 2006. "How Large are the Direct Employment Effects of New Businesses? An Empirical Investigation for West Germany," Small Business Economics, Springer, vol. 27(2), pages 245-260, October.
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