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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

Suggested Citation

  • De-Chih Liu, 2013. "Small business job creation hypothesis in Taiwan," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(3), pages 1459-1492, April.
  • Handle: RePEc:spr:qualqt:v:47:y:2013:i:3:p:1459-1492
    DOI: 10.1007/s11135-011-9602-2
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    References listed on IDEAS

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    1. 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 211-224, June.
    2. 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.
    3. Davis, Steven J & Haltiwanger, John & Schuh, Scott, 1996. "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Small Business Economics, Springer, vol. 8(4), pages 297-315, August.
    4. Baldwin, John & Picot, Garnett, 1995. "Employment Generation by Small Producers in the Canadian Manufacturing Sector," Small Business Economics, Springer, vol. 7(4), pages 317-331, August.
    5. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-2132, December.
    6. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
    7. Carree, Martin & Klomp, Luuk, 1996. "Small Business and Job Creation: A Comment," Small Business Economics, Springer, vol. 8(4), pages 317-322, August.
    8. 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.
    9. 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 153-169, March.
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