IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v60y2021i2p119-132.html
   My bibliography  Save this article

Size and Age as Determinants of Employment Growth among Manufacturing Firms in Pakistan

Author

Listed:
  • Farrukh Iqbal

    (Center for Social Policy Research, Karachi.)

  • Aadil Nakhoda

    (Institute of Business Administration, Karachi.)

Abstract

Size-based industrial policy (support for small firms) has long been provided by the government in Pakistan while age-based policy (support for young firms) has become prominent in recent years. Both policies are typically justified by reference to positive effects on labour absorption. Despite their popularity among policymakers, however, the empirical basis for such policies has not been adequately analysed at the national level. We address this issue using data from a large, multisector, random sample of manufacturing firms and find empirical support for size-based policies but not for age-based ones. We also find that sizebased policies appear most relevant for firms with less than fifty workers.

Suggested Citation

  • Farrukh Iqbal & Aadil Nakhoda, 2021. "Size and Age as Determinants of Employment Growth among Manufacturing Firms in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 60(2), pages 119-132.
    • Handle: RePEc:pid:journl:v:60:y:2021:i:2:p:119-132
    as

    Download full text from publisher

    File URL: https://pide.org.pk/wp-content/uploads/119-132.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Dohmen & Armin Falk & Bart H. H. Golsteyn & David Huffman & Uwe Sunde, 2017. "Risk Attitudes Across The Life Course," Economic Journal, Royal Economic Society, vol. 127(605), pages 95-116, October.
    2. Reyes Aterido & Mary Hallward-Driemeier & Carmen Pagés, 2011. "Big Constraints to Small Firms' Growth? Business Environment and Employment Growth across Firms," Economic Development and Cultural Change, University of Chicago Press, vol. 59(3), pages 609-647.
    3. Wadho, Waqar & Goedhuys, Micheline & Chaudhry, Azam, 2019. "Young innovative companies and employment creation, evidence from the Pakistani textiles sector," World Development, Elsevier, vol. 117(C), pages 139-152.
    4. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
    5. Urata, Shujiro & Kawai, Hiroki, 2002. "Technological Progress by Small and Medium Enterprises in Japan," Small Business Economics, Springer, vol. 18(1-3), pages 53-67, Feb.- May.
    6. Meghana Ayyagari & Asli Demirguc-Kunt & Vojislav Maksimovic, 2014. "Who creates jobs in developing countries?," Small Business Economics, Springer, vol. 43(1), pages 75-99, June.
    7. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    8. Hamna Ahmed & Naved Hamid, 2011. "Financing Constraints: Determinants and Implications for Firm Growth in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(Special E), pages 317-346, September.
    9. David Neumark & Brandon Wall & Junfu Zhang, 2011. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 16-29, August.
    10. Thomas Dohmen & Armin Falk & Bart H. H. Golsteyn & David Huffman & Uwe Sunde, 2017. "Risk Attitudes Across The Life Course," Economic Journal, Royal Economic Society, vol. 127(605), pages 95-116, October.
    11. Abdul Waheed, 2017. "The Employment Effect of Innovation: Evidence from Bangladesh and Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 56(2), pages 105-126.
    12. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
    13. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131, December.
    14. Mona Sur & Jian Zhang & Kevin Chen, 2014. "The investment climate and enterprise performance in rural Pakistan: implications for rural non-farm employment generation," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(3), pages 488-505, July.
    15. Arne Bigsten & Mulu Gebreeyesus, 2007. "The Small, the Young, and the Productive: Determinants of Manufacturing Firm Growth in Ethiopia," Economic Development and Cultural Change, University of Chicago Press, vol. 55(4), pages 813-840, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oznur Ozdamar & Eleftherios Giovanis & Sahizer Samuk, 2020. "State business relations and the dynamics of job flows in Egypt and Turkey," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 519-558, December.
    2. Blessing Atwine & Ibrahim Mike Okumu & John Bosco Nnyanzi, 2023. "What drives the dynamics of employment growth in firms? Evidence from East Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-25, December.
    3. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(2), pages 277-305.
    4. Diwan, Ishac & Jamal Ibrahim Haidar, "undated". "Do Political Connections Reduce Job Creation? Evidence from Lebanon," Working Paper 414186, Harvard University OpenScholar.
    5. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(6), pages 1453-1495, December.
    6. Stephen Esaku, 2022. "Which firms drive employment growth in Sub-Saharan Africa? Evidence from Kenya," Small Business Economics, Springer, vol. 59(1), pages 383-396, June.
    7. Arouri, Hassan & Youssef, Adel Ben & Quatraro, Francesco & Vivarelli, Marco, 2018. "The Determinants of Young Firms Growth in Tunisia," IZA Discussion Papers 11400, Institute of Labor Economics (IZA).
    8. Michael Anyadike-Danes & Carl-Magnus Bjuggren & Sandra Gottschalk & Werner Hölzl & Dan Johansson & Mika Maliranta & Anja Myrann, 2015. "An international cohort comparison of size effects on job growth," Small Business Economics, Springer, vol. 44(4), pages 821-844, April.
    9. Marco Grazzi & Daniele Moschella, 2018. "Small, young, and exporters: New evidence on the determinants of firm growth," Journal of Evolutionary Economics, Springer, vol. 28(1), pages 125-152, January.
    10. Hassan Arouri & Adel Ben Youssef & Francesco Quatraro & Marco Vivarelli, 2020. "Drivers of growth in Tunisia: young firms vs incumbents," Small Business Economics, Springer, vol. 54(1), pages 323-340, January.
    11. Arouri, Hassan & Ben Youssef, Adel & Quatraro, Francesco & Vivarelli, Marco, 2018. "Growth Dynamics of Young Small Firms: Evidence from Tunisia," GLO Discussion Paper Series 197, Global Labor Organization (GLO).
    12. Taelim Choi & Anil Rapusinga & John C. Robertson & Nancy Green Leigh, 2017. "The Effects of High Growth on New Business Survival," The Review of Regional Studies, Southern Regional Science Association, vol. 47(1), pages 1-23, Winter.
    13. Marcela Eslava & John C. Haltiwanger & Alvaro Pinzón, 2019. "Job creation in Colombia vs the U.S.: “up or out dynamics” meets “the life cycle of plants”," NBER Working Papers 25550, National Bureau of Economic Research, Inc.
    14. Bergner, Sören Martin & Bräutigam, Rainer & Evers, Maria Theresia & Spengel, Christoph, 2017. "The use of SME tax incentives in the European Union," ZEW Discussion Papers 17-006, ZEW - Leibniz Centre for European Economic Research.
    15. Kahsay Gerezihar Tsaedu & Zhihong Chen, 2021. "The Dynamics of Firm Growth in Sub-Saharan Africa: Evidence from Ethiopian Manufacturing Sector 1996–2017," Journal of Industry, Competition and Trade, Springer, vol. 21(3), pages 367-392, September.
    16. Karlsson, Johan, 2018. "Does regional context matter for family firm employment growth?," Journal of Family Business Strategy, Elsevier, vol. 9(4), pages 293-310.
    17. Ishac Diwan & Jamal Ibrahim Haidar, 2021. "Political Connections Reduce Job Creation: Firm-level Evidence from Lebanon," Journal of Development Studies, Taylor & Francis Journals, vol. 57(8), pages 1373-1396, August.
    18. Idrees Khawaja & Nasir Iqbal, 2019. "Determinants of Expansion of Micro and Small Firms and State of Entrepreneurship in Pakistan," PIDE-Working Papers 2019:160, Pakistan Institute of Development Economics.
    19. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
    20. Meri Davlasheridze & Pinar C. Geylani, 2017. "Small Business vulnerability to floods and the effects of disaster loans," Small Business Economics, Springer, vol. 49(4), pages 865-888, December.

    More about this item

    Keywords

    Firm Size; Firm Age; Employment Growth; Manufacturing; Pakistan; Industrial Policy;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:60:y:2021:i:2:p:119-132. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Khurram Iqbal (email available below). General contact details of provider: https://edirc.repec.org/data/pideipk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.