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An International Cohort Comparison of Size Effects on Job Growth

  • Anyadike-Danes, Michael

    (Aston Business School and Enterprise Research Centre, UK)

  • Bjuggren, Carl Magnus

    ()

    (Research Institute of Industrial Economics (IFN))

  • Gottschalk, Sandra

    (ZEW, Germany)

  • Hölzl, Werner

    (WIFO, Austria)

  • Johansson, Dan

    ()

    (HUI Research)

  • Maliranta, Mika

    (ETLA)

  • Myrann, Anja

    (Ragnar Frisch Centre for Economic Research, Norway)

The contribution of different-sized businesses to job creation continues to attract policymakers’ attention, however, it has recently been recognized that conclusions about size were confounded with the effect of age. We probe the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life, using variation across half a dozen northern European countries Austria, Finland, Germany, Norway, Sweden, and the UK to pin down size effects. We find that a very small proportion of the smallest firms play a crucial role in accounting for cross-country differences in job growth. A closer analysis reveals that the initial size distribution and survival rates do not seem to explain job growth differences between countries, rather it is a small number of rapidly growing firms that are driving this result.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 1019.

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Length: 38 pages
Date of creation: 24 Apr 2014
Date of revision: 30 Nov 2014
Handle: RePEc:hhs:iuiwop:1019
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  1. Erik Hurst & Benjamin Wild Pugsley, 2011. "What do Small Businesses Do?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 73-142.
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  17. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
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