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


  • David Neumark

    (University of California, Irvine, Public Policy Institute of California, NBER, and IZA)

  • Brandon Wall

    (Ph.D. candidate in economics at Stanford University and KIPP Foundation)

  • Junfu Zhang

    (Clark University)


We use the National Establishment Time Series (NETS) to revisit the debate about the role of small businesses in job creation (Birch, 1987; Davis, Haltiwanger, & Schuh, 1996a). Using the NETS data, we examine evidence for the overall economy, as well as for different sectors. The results indicate that small firms and small establishments create more jobs, on net, although the difference is much smaller than Birch's methods suggest. Moreover, in the recent period we study, a negative relationship between establishment size and net job creation holds for both the manufacturing and services sectors. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • David Neumark & Brandon Wall & Junfu Zhang, 2011. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 16-29, August.
  • Handle: RePEc:tpr:restat:v:93:y:2011:i:1:p:16-29

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    More about this item

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy


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