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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Other versions of this item:
- Gerrit Wit & Jan Kok, 2014. "Do small businesses create more jobs? New evidence for Europe," Small Business Economics, Springer, vol. 42(2), pages 283-295, February.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
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.:
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