Advanced Search
MyIDEAS: Login to save this paper or follow this series

Do Small Businesses Create More Jobs? New Evidence from the National Establishment Time Series

Contents:

Author Info

  • David Neumark
  • Brandon Wall
  • Junfu Zhang

Abstract

We use a new database, the National Establishment Time Series (NETS), to revisit the debate about the role of small businesses in job creation. Birch (e.g., 1987) argued that small firms are the most important source of job creation in the U.S. economy, but Davis et al. (1996a) argued that this conclusion was flawed, and based on improved methods and using data for the manufacturing sector they concluded that there was no relationship between establishment size and net job creation. Using the NETS data, we examine evidence for the overall economy, as well as for different sectors. The results indicate that small establishments and small firms create more jobs, on net, although the difference is much smaller than what is suggested by Birch's methods. However, the negative relationship between establishment size and job creation is much less clear for the manufacturing sector, which may explain some of the earlier findings contradicting Birch's conclusions.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w13818.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13818.

as in new window
Length:
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:nbr:nberwo:13818

Note: IO LS
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Kirchhoff, Bruce A. & Phillips, Bruce D., 1988. "The effect of firm formation and growth on job creation in the United States," Journal of Business Venturing, Elsevier, vol. 3(4), pages 261-272.
  2. Bronwyn H. Hall, 1986. "The Relationship Between Firm Size and Firm Growth in the U.S. Manufacturing Sector," NBER Working Papers 1965, National Bureau of Economic Research, Inc.
  3. Heshmati, Almas, 2000. "On the Growth of Micro and Small Firms," Working Paper Series in Economics and Finance, Stockholm School of Economics 396, Stockholm School of Economics.
  4. Neumark, David & Zhang, Junfu & Wall, Brandon, 2005. "Employment Dynamics and Business Relocation: New Evidence from the National Establishment Time Series," IZA Discussion Papers 1774, Institute for the Study of Labor (IZA).
  5. José Fariñas & Lourdes Moreno, 2000. "Firms' Growth, Size and Age: A Nonparametric Approach," Review of Industrial Organization, Springer, Springer, vol. 17(3), pages 249-265, November.
  6. D.B. Audretsch & L. Klomp & E. Santarelli & A.R. Thurik, 2004. "Gibrat's Law: Are the Services Different?," Review of Industrial Organization, Springer, Springer, vol. 24(3), pages 301-324, 05.
  7. Francesca Lotti, 2007. "Firm dynamics in manufacturing and services: a broken mirror?," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 347-369, June.
  8. Jed Kolko & David Neumark, 2008. "Changes In The Location Of Employment And Ownership: Evidence From California," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 48(4), pages 717-744.
  9. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262540932, December.
  10. Picot, Garnett & Baldwin, John R., 1994. "Employment Generation by Small Producers in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1994070e, Statistics Canada, Analytical Studies Branch.
  11. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
  12. Matthew Barnes & Jonathan Haskel, 2002. "Job Creation, Job Destruction and the Contribution of Small Businesses: Evidence for UK Manufacturing," Working Papers, Queen Mary, University of London, School of Economics and Finance 461, Queen Mary, University of London, School of Economics and Finance.
  13. Fotini Voulgaris & Theodore Papadogonas & George Agiomirgianakis, 2005. "Job Creation and Job Destruction in Greek Manufacturing," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 9(2), pages 289-301, 05.
  14. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 104(4), pages 671-98, November.
  15. Davis, Steven J & Haltiwanger, John & Schuh, Scott, 1996. " Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Small Business Economics, Springer, Springer, vol. 8(4), pages 297-315, August.
  16. Steven Klepper & Elizabeth Graddy, 1990. "The Evolution of New Industries and the Determinants of Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 27-44, Spring.
  17. 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, Springer, vol. 9(3), pages 211-24, June.
  18. Chesher, Andrew, 1979. "Testing the Law of Proportionate Effect," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 27(4), pages 403-11, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Nikolaj Malchow-Møller & Bertel Schjerning & Anders Sørensen, 2009. "Entrepreneurship, Job Creation, and Wage Growth," CAM Working Papers, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics 2009-01, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  2. Anil Rupasingha, 2013. "Locally owned: Do local business ownership and size matter for local economic well-being?," Community and Economic Development Discussion Paper, Federal Reserve Bank of Atlanta 2013-01, Federal Reserve Bank of Atlanta.
  3. Bögenhold, Dieter & Fachinger, Uwe, 2012. "Unternehmertum: Unterschiedliche Facetten selbstständiger Berufstätigkeit
    [Entrepreneurship: Diverse aspects of self-employment]
    ," MPRA Paper 51459, University Library of Munich, Germany.
  4. Andrew Kerr & Martin Wittenberg & Jairo Arrow, 2013. "Job Creation and Destruction in South Africa," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 092, Southern Africa Labour and Development Research Unit, University of Cape Town.
  5. repec:ldr:wpaper:92 is not listed on IDEAS
  6. Philippe Aghion & Ufuk Akcigit & Peter Brown, 2013. "What Do We Learn From Schumpeterian Growth Theory?," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 13-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. Marco Corsino & Roberto Gabriele & Sandro Trento, 2010. "Job flows in Italian SMEs: a longitudinal analysis of growth, size and age," DISA Working Papers, Department of Computer and Management Sciences, University of Trento, Italy 1008, Department of Computer and Management Sciences, University of Trento, Italy, revised 22 Dec 2010.
  8. World Bank, 2010. "Scaling-Up SME Access to Financial Services," World Bank Other Operational Studies 12515, The World Bank.
  9. Lofstrom, Magnus, 2009. "Does Self-Employment Increase the Economic Well-Being of Low-Skilled Workers?," IZA Discussion Papers 4539, Institute for the Study of Labor (IZA).
  10. De-Chih Liu, 2013. "Small business job creation hypothesis in Taiwan," Quality & Quantity: International Journal of Methodology, Springer, Springer, vol. 47(3), pages 1459-1492, April.
  11. Kameliia Petrova, 2012. "Sources of Employment Growth in the North Country," New York Economic Review, New York State Economics Association (NYSEA), New York State Economics Association (NYSEA), vol. 43(1), pages 46-69.
  12. Corseuil, Carlos Henrique L. & Moura, Rodrigo Leandro de, 2010. "The effects of tax incentives for small firms on employment levels," Economics Working Papers (Ensaios Economicos da EPGE) 701, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  13. Philippe Aghion & Ufuk Akcigit & Peter Howitt, 2013. "What Do We Learn From Schumpeterian Growth Theory?," NBER Working Papers 18824, National Bureau of Economic Research, Inc.
  14. Roxana Gutiérrez-Romero, 2012. "Determinants of Spanish Firms' Life Cycle and Job Creation: A Pseudo-Panel Approach," Working Papers, Department of Applied Economics at Universitat Autonoma of Barcelona wpdea1209, Department of Applied Economics at Universitat Autonoma of Barcelona.
  15. Aghion, Philippe & Akcigit, Ufuk & Howitt, Peter, 2013. "What Do We Learn From Schumpeterian Growth Theory?," Working Paper Series in Economics and Institutions of Innovation, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies 298, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  16. Haunschild, Ljuba & May-Strobl, Eva, 2009. "Arbeitsplatzdynamik und nachhaltige Beschäftigungswirkungen in kleinen und mittleren Unternehmen: Eine empirische Untersuchung auf Basis des Umsatzsteuerpanels für die Jahre 2001 bis 2005," Working Papers, Institut für Mittelstandsforschung (IfM) Bonn 06/09, Institut für Mittelstandsforschung (IfM) Bonn.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:13818. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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