Do Small Businesses Create More Jobs? New Evidence for Europe
AbstractIn this paper we argue why, in our view, the so-called dynamic classification method should be favored when determining the contribution of small businesses towards job creation. First, it is the only method that consistently attributes job creation or loss to the size class in which it actually occurs. In addition, dynamic classification has two other advantages: (i) it is not vulnerable to the so-called regression to the mean bias and (ii) only a small number of aggregated data are required for its application. Using the dynamic classification we analyze job creation within the different size classes for the 27 Member States of the European Union. Our main findings are as follows: For the EU as a whole, smaller firms contribute on a larger scale towards job creation than larger firms do. Net job creation rates decrease with each firm size class. This pattern occurs in most industries however, not in all: the manufacturing industry and trade industry show different patterns. At the level of individual countries, the net job creation rate also tends todecrease with each firm size class. However, this relation is not perfect.
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Bibliographic InfoPaper provided by EIM Business and Policy Research in its series Scales Research Reports with number H201203.
Length: 23 pages
Date of creation: 09 Apr 2013
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-20 (All new papers)
- NEP-BEC-2012-02-20 (Business Economics)
- NEP-SBM-2012-02-20 (Small Business Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Picot, Garnett & Dupuy, Richard, 1998. " Job Creation by Company Size Class: The Magnitude, Concentration and Persistence of Job Gains and Losses in Canada," Small Business Economics, Springer, vol. 10(2), pages 117-39, March.
- Jan de Kok & Gerrit de Wit & Kashifa Suddle, 2006. "SMEs as job engine of the Dutch private economy," Scales Research Reports H200601, EIM Business and Policy Research.
- 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.
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