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Age or Size? Determinants of Job Creation

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  • Lawless, Martina

    (Central Bank of Ireland)

Abstract

Small firms have often been identified as drivers of job creation, although the evidence on their contribution to net employment growth has been disputed. This paper shows that job turnover and firm growth vary systematically across firm size groups and that smaller firms do indeed make an important contribution to new job creation. There is a significant caveat, however; we find that it is not firm size per se that is driving these results but rather firm age. The considerable overlap between the two properties, as young firms overwhelmingly tend to be small, has perhaps led to much of the effect of firm age being misattributed to size. We show that younger firms are consistently more dynamic than older firms and this holds across all size classes, not just amongst smaller firms. In addition, a relationship between lagged employment and firm growth is found to exist only for young firms.

Suggested Citation

  • Lawless, Martina, 2013. "Age or Size? Determinants of Job Creation," Research Technical Papers 02/RT/13, Central Bank of Ireland.
    • Handle: RePEc:cbi:wpaper:02/rt/13
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    File URL: https://centralbank.ie/docs/default-source/publications/research-technical-papers/research-technical-paper-02rt13.pdf?sfvrsn=8
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    References listed on IDEAS

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    Cited by:

    1. Tadeu LEONARDO & Francisco DINIZ, 2020. "Gross Job - Creation And Gross Job - Destruction Determinants: Empirical Analyse At Micro Firms Data Level," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 81-90, June.
    2. Edgar Rogelio Ramírez-Solis & Mauro Rodriguez-Marin, 2022. "Diffusion Model for Mexican SMEs to Support the Success of Innovation," Sustainability, MDPI, vol. 14(16), pages 1-14, August.
    3. Criscuolo, Chiara & Gal, Peter N. & Menon, Carlo, 2014. "The dynamics of employment growth: new evidence from 18 countries," LSE Research Online Documents on Economics 60286, London School of Economics and Political Science, LSE Library.
    4. Gusciute, Egle & Quinn, Emma & Barrett,Alan, 2015. "Business Migration to Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS43.
    5. Dorothea Schäfer & Susan Steiner, 2014. "Financial Development and Employment: Evidence from Transition Countries," Discussion Papers of DIW Berlin 1390, DIW Berlin, German Institute for Economic Research.

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