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How important are small businesses in the Tenth District?


  • Jason Henderson


Small businesses were widely recognized in the 1980s as the driving force behind economic growth. One benchmark study estimated that small firms accounted for 80 percent of all new jobs in the nation in the late 1970s. Analysts predicted that small businesses would continue to provide most new jobs as the economy became more service-oriented and therefore dominated by firms that tended to be smaller in scale. ; The desire to promote small businesses as an engine of job growth was partly responsible for efforts in the mid-1980s to overhaul the tax system and deregulate business. Since then, election campaigns and congressional debates have continued to place small businesses and job growth together in the public eye. ; Today, improved access to additional data allows a comprehensive look at the importance of small businesses in the Tenth District economy. Small firms continue to be the primary source of total jobs in the district, accounting for 60 percent of all jobs in 1994. But not all sectors of the district economy favor small firms. For instance, small firms in 1994 accounted for less than a third of all manufacturing jobs in the district. Therefore, in their efforts to promote job growth policymakers should not overlook the contribution that large firms can make in some key sectors.

Suggested Citation

  • Jason Henderson, 1997. "How important are small businesses in the Tenth District?," Regional Economic Digest, Federal Reserve Bank of Kansas City, issue Q III, pages 9-12.
  • Handle: RePEc:fip:fedkre:y:1997:i:qiii:p:9-12

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    Small business ; Federal Reserve District; 10th;


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