IDEAS home Printed from https://ideas.repec.org/p/eim/papers/h201203.html
   My bibliography  Save this paper

Do Small Businesses Create More Jobs? New Evidence for Europe

Author

Listed:
  • Jan de Kok
  • Gerrit de Wit

Abstract

In this paper we argue why, in our view, the so-called dynamic classification method should be favored when determining the contribution of small businesses towards job creation. First, it is the only method that consistently attributes job creation or loss to the size class in which it actually occurs. In addition, dynamic classification has two other advantages: (i) it is not vulnerable to the so-called regression to the mean bias and (ii) only a small number of aggregated data are required for its application. Using the dynamic classification we analyze job creation within the different size classes for the 27 Member States of the European Union. Our main findings are as follows: For the EU as a whole, smaller firms contribute on a larger scale towards job creation than larger firms do. Net job creation rates decrease with each firm size class. This pattern occurs in most industries however, not in all: the manufacturing industry and trade industry show different patterns. At the level of individual countries, the net job creation rate also tends todecrease with each firm size class. However, this relation is not perfect.

Suggested Citation

  • Jan de Kok & Gerrit de Wit, 2013. "Do Small Businesses Create More Jobs? New Evidence for Europe," Scales Research Reports H201203, EIM Business and Policy Research.
  • Handle: RePEc:eim:papers:h201203
    as

    Download full text from publisher

    File URL: http://www.entrepreneurship-sme.eu/pdf-ez/H201203.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. D.B. Audretsch & L. Klomp & E. Santarelli & A.R. Thurik, 2004. "Gibrat's Law: Are the Services Different?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(3), pages 301-324, May.
    2. 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.
    3. Jan de Kok & Gerrit de Wit & Kashifa Suddle, 2006. "SMEs as job engine of the Dutch private economy," Scales Research Reports H200601, EIM Business and Policy Research.
    4. Picot, Garnett & Dupuy, Richard, 1998. "Job Creation by Company Size Class: The Magnitude, Concentration and Persistence of Job Gains and Losses in Canada," Small Business Economics, Springer, vol. 10(2), pages 117-139, March.
    5. Fotini Voulgaris & Theodore Papadogonas & George Agiomirgianakis, 2005. "Job Creation and Job Destruction in Greek Manufacturing," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 289-301, May.
    6. 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.
    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.
    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


    Cited by:

    1. Soonae Park & Byung-Yeon Kim & Wonchang Jang & Kyung-Min Nam, 2014. "Imperfect information and labor market bias against small and medium-sized enterprises: a Korean case," Small Business Economics, Springer, vol. 43(3), pages 725-741, October.
    2. Martin Binder, 2017. "Entrepreneurial Success and Subjective Well-Being: Worries about the Business Explain One's Well-Being Loss from Self-Employment," SOEPpapers on Multidisciplinary Panel Data Research 947, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Geurts, Karen & Van Biesebroeck, Johannes, 2016. "Firm creation and post-entry dynamics of de novo entrants," International Journal of Industrial Organization, Elsevier, vol. 49(C), pages 59-104.
    4. RUSU Valentina Diana & ROMAN Angela, 2016. "The Impact Of Macroeconomic Conditions On Smes Performance In Terms Of Employment," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 68(3), pages 142-159, December.
    5. repec:bla:jecrev:v:68:y:2017:i:2:p:173-187 is not listed on IDEAS
    6. Rita Rahayu & John Day, 2017. "E-commerce adoption by SMEs in developing countries: evidence from Indonesia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 7(1), pages 25-41, April.
    7. Michael Anyadike-Danes & Carl-Magnus Bjuggren & Sandra Gottschalk & Werner Hölzl & Dan Johansson & Mika Maliranta & Anja Myrann, 2015. "An international cohort comparison of size effects on job growth," Small Business Economics, Springer, vol. 44(4), pages 821-844, April.
    8. Peter van der Zwan & Jolanda Hessels & Cornelius A. Rietveld, 2015. "The Pleasures and Pains of Self-Employment: A Panel Data Analysis of Satisfaction with Life, Work, and Leisure," Tinbergen Institute Discussion Papers 15-099/VII, Tinbergen Institute.
    9. Hessels, Jolanda & Rietveld, Cornelius A. & van der Zwan, Peter, 2017. "Self-employment and work-related stress: The mediating role of job control and job demand," Journal of Business Venturing, Elsevier, vol. 32(2), pages 178-196.
    10. Fornaro, Paolo & Luomaranta, Henri, 2015. "Small Versus Large Firms Employment Patterns in Finland: a Comparison," MPRA Paper 66979, University Library of Munich, Germany.
    11. repec:eee:resene:v:49:y:2017:i:c:p:86-98 is not listed on IDEAS
    12. Fornaro, Paolo & Luomaranta, Henri, 2016. "Job Creation and the Role of Dependencies," MPRA Paper 71586, University Library of Munich, Germany.
    13. Andersson, Fredrik W. & Johansson, Dan & Karlsson, Johan & Lodefalk, Magnus & Poldahl, Andreas, 2017. "The Characteristics and Performance of Family Firms: Exploiting information on ownership, governance and kinship using total population data," Working Papers 2017:1, Örebro University, School of Business.
    14. repec:oup:jecgeo:v:17:y:2017:i:5:p:959-974. is not listed on IDEAS
    15. repec:eee:joepsy:v:64:y:2018:i:c:p:73-88 is not listed on IDEAS
    16. Tubadji, Annie & Nijkamp, Peter & Santarelli, Enrico, 2017. "Shacklean Uncertainty and Cultural Embeddedness as Innovation Constraints in the UK," GLO Discussion Paper Series 111, Global Labor Organization (GLO).
    17. Bergner, Sören Martin & Bräutigam, Rainer & Evers, Maria Theresia & Spengel, Christoph, 2017. "The use of SME tax incentives in the European Union," ZEW Discussion Papers 17-006, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    18. Borsi, Balázs & Dőry, Tibor, 2015. "A vállalkozóképzés nemzetközi trendjei és a vállalkozói készségek egyetemi fejlesztése. A Széchenyi István Egyetem tudásvállalkozás-fejlesztési programjának tapasztalatai
      [International trends of e
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 835-852.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eim:papers:h201203. 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: (Webmaster EIM). General contact details of provider: http://edirc.repec.org/data/eimbpnl.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.