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Job Creation, Job Destruction and the Role of Small Firms: Firm-Level Evidence for the UK

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  • Alex Hijzen,
  • Richard Upward,
  • Peter Wright

Abstract

Evidence on job creation and destruction for the UK is still limited compared to that available from other countries. What evidence there is refers almost entirely to the manufacturing sector, with the most recent figures referring to the 1980s. There are therefore no recent estimates for the great majority of firms in the UK . In this paper we use firm-level data from 1997–2005 to calculate job creation and destruction rates for almost all sectors, including services. We show that firms in the service sector exhibit much higher rates of job creation and slightly higher rates of job destruction. One-third of new jobs are created by the entry of new firms, while half of lost jobs are destroyed by the exit of firms. “Small” firms (those with fewer than 100 employees) account for a disproportionately large fraction of job creation and destruction relative to their share of employment. This finding is robust to the definition of firm size used.

Suggested Citation

  • Alex Hijzen, & Richard Upward, & Peter Wright, "undated". "Job Creation, Job Destruction and the Role of Small Firms: Firm-Level Evidence for the UK," Discussion Papers 07/01, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:07/01
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. In defence of the inflation target
      by chris dillow in Stumbling and Mumbling on 2008-09-23 21:23:58
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      by chris dillow in Stumbling and Mumbling on 2008-08-31 17:43:39
    3. The state as risk manager
      by chris dillow in Stumbling and Mumbling on 2013-01-23 18:34:43

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    Cited by:

    1. Marcelo Resende & Vicente Cardoso & Luis Otávio Façanha, 2016. "Determinants of survival of newly created SMEs in the Brazilian manufacturing industry: an econometric study," Empirical Economics, Springer, vol. 50(4), pages 1255-1274, June.
    2. Mário Centeno & Álvaro A. Novo & Carla Machado, 2007. "Job Creation and Destruction in Portugal," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    3. Aga,Gemechu A. & Francis,David C. & Rodriguez Meza,Jorge Luis, 2015. "SMEs, age, and jobs : a review of the literature, metrics, and evidence," Policy Research Working Paper Series 7493, The World Bank.
    4. Mitsoyo Ando & Fukunari Kimura, 2015. "Globalization and Domestic Operations: Applying the JC/JD Method to Japanese Manufacturing Firms," Asian Economic Papers, MIT Press, vol. 14(2), pages 1-35, Summer.
    5. repec:taf:intecj:v:31:y:2017:i:2:p:245-296 is not listed on IDEAS
    6. Irani Arráiz & Miriam Bruhn & Rodolfo Stucchi, 2015. "Psychometrics as a Tool to Improve Screening and Access to Credit," IDB Publications (Working Papers) 7266, Inter-American Development Bank.
    7. repec:ldr:wpaper:92 is not listed on IDEAS
    8. Oliver Ludewig & Antje Weyh, 2011. "Die regionale Arbeitsplatzdynamik in Deutschland – Mehr Bewegung im Osten," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 31(1), pages 27-56, June.
    9. 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.
    10. Bryson, Alex & White, Michael, 2017. "HRM and Small-Firm Employee Motivation: Before and after the Recession," IZA Discussion Papers 10737, Institute for the Study of Labor (IZA).
    11. KODAMA Naomi & INUI Tomohiko, 2015. "The Impact of Globalization on Establishment-Level Employment Dynamics in Japan," Discussion papers 15002, Research Institute of Economy, Trade and Industry (RIETI).
    12. Salem Abo-Zaid, 2014. "Net job creation in the US economy: lessons from monthly data, 1950-2011," Applied Economics, Taylor & Francis Journals, vol. 46(22), pages 2623-2638, August.
    13. Irani Arráiz & Miriam Bruhn & Rodolfo Stucchi, 2015. "Psychometrics as a Tool to Improve Screening and Access to Credit," IDB Publications (Working Papers) 7266, Inter-American Development Bank.
    14. Mário Centeno & Álvaro A. Novo & Carla Machado, 2008. "The Anatomy of Employment Growth in Portuguese Firms," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    15. F. Voulgaris & G. Agiomirgianakis & T. Papadogonas, 2015. "Job creation and job destruction in economic crisis at firm level: the case of Greek manufacturing sectors," International Economics and Economic Policy, Springer, vol. 12(1), pages 21-39, March.
    16. Alex Bryson & John Forth, 2016. "What Role Did Management Practices Play in SME Growth Post-recession?," DoQSS Working Papers 16-11, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    17. Marco Corsino & Roberto Gabriele & Sandro Trento, 2010. "Job flows in Italian SMEs: a longitudinal analysis of growth, size and age," DISA Working Papers 1008, Department of Computer and Management Sciences, University of Trento, Italy, revised 22 Dec 2010.
    18. Morrissey, Karyn, 2014. "Using secondary data to examine economic trends in a subset of sectors in the English marine economy: 2003–2011," Marine Policy, Elsevier, vol. 50(PA), pages 135-141.
    19. Hanhyung Pyo & Sungcheol Hong & Ahnjeong Kim, 2016. "irm Size and Job Creation in Korea: Do Small Businesses Create More Jobs?," Korean Economic Review, Korean Economic Association, vol. 32, pages 137-166.
    20. ANDO Mitsuyo & KIMURA Fukunari, 2017. "Job Creation and Destruction at the Levels of Intra-firm Sections, Firms, and Industries in Globalization: The case of Japanese manufacturing firms," Discussion papers 17100, Research Institute of Economy, Trade and Industry (RIETI).

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    Keywords

    Job creation; job destruction; small firms;

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