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Small business job creation hypothesis in Taiwan

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  • De-Chih Liu

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    Abstract

    This paper explores the so-called small business job creation hypothesis. There are several significant findings. Firstly, we found that the base-size and current-size measures produce different results for the net job creation rate which is consistent with the results published by Davis et al. (Small Bus Econ, 8(4):297–315, 1996a , Job creation and destruction. MIT Press, Cambridge, MA, 1996b ). These discrepancies suggest that further investigation of the extent of bias in the calculation of gross and net job flows for small business was warranted. Secondly, we also discovered that the number of inter-class plants is small. However, a large percentage of job creation and destruction is due to inter-class plants which suggest that the use of the base-size measure may involve significant regression bias. Thirdly, we discovered that in terms of job creation and destruction shares, the extent of regression bias of small business should be treated with caution. Finally, we found that the current-size measure largely addresses regression bias with respect to job creation and destruction treated separately. Copyright Springer Science+Business Media B.V. 2013

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    File URL: http://hdl.handle.net/10.1007/s11135-011-9602-2
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    Bibliographic Info

    Article provided by Springer in its journal Quality & Quantity.

    Volume (Year): 47 (2013)
    Issue (Month): 3 (April)
    Pages: 1459-1492

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    Handle: RePEc:spr:qualqt:v:47:y:2013:i:3:p:1459-1492

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    Web page: http://www.springer.com/economics/journal/11135

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    Related research

    Keywords: Small business; Job creation; Base-size measure; Current-size measure; Job destruction; Regression bias;

    References

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    1. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
    2. Steven J. Davis & John Haltiwanger & Scott Schuh, 1993. "Small Business and Job Creation: Dissecting the Myth and Reassessing theFacts," NBER Working Papers 4492, National Bureau of Economic Research, Inc.
    3. Steve J. Davis & John Haltiwanger, 1991. "Gross job creation, gross job destruction and employment reallocation," Working Paper Series, Macroeconomic Issues 91-5, Federal Reserve Bank of Chicago.
    4. Broersma, Lourens & Gautier, Pieter, 1997. " Job Creation and Job Destruction by Small Firms: An Empirical Investigation for the Dutch Manufacturing Sector," Small Business Economics, Springer, vol. 9(3), pages 211-24, June.
    5. Picot, Garnett & Baldwin, John R., 1994. "Employment Generation by Small Producers in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 1994070e, Statistics Canada, Analytical Studies Branch.
    6. Kirchhoff, Bruce A & Greene, Patricia G, 1998. " Understanding the Theoretical and Empirical Content of Critiques of U.S. Job Creation Research," Small Business Economics, Springer, vol. 10(2), pages 153-69, March.
    7. Davidsson, Per & Lindmark, Leif & Olofsson, Christer, 1998. " The Extent of Overestimation of Small Firm Job Creation--An Empirical Examination of the Regression Bias," Small Business Economics, Springer, vol. 11(1), pages 87-100, August.
    8. David Neumark & Brandon Wall & Junfu Zhang, 2008. "Do Small Businesses Create More Jobs? New Evidence from the National Establishment Time Series," NBER Working Papers 13818, National Bureau of Economic Research, Inc.
    9. Carree, Martin & Klomp, Luuk, 1996. " Small Business and Job Creation: A Comment," Small Business Economics, Springer, vol. 8(4), pages 317-22, August.
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