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Age or size? Contributions to job creation

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  • Martina Lawless

Abstract

Small firms have been identified as drivers of job creation, although the evidence on their contribution to net employment growth has been disputed. This article shows that job turnover and firm growth vary systematically across firm size groups and that smaller firms do indeed make an important contribution to new job creation. There is a significant caveat, however; we find that it is not firm size per se that is driving these results but rather firm age. We show that younger firms are consistently more dynamic than older firms. We also find a strong inverse relationship between employment growth and size for young firms, but this declines very markedly for older age groups. This provides some support for the Gibrat’s law prediction that size and growth are independent, but only once the firm has moved beyond the start-up stage. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Martina Lawless, 2014. "Age or size? Contributions to job creation," Small Business Economics, Springer, vol. 42(4), pages 815-830, April.
    • Handle: RePEc:kap:sbusec:v:42:y:2014:i:4:p:815-830
    DOI: 10.1007/s11187-013-9513-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Job creation; Firm size; Firm age; Entry and exit; J23; L25; L26;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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