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Is Small Beautiful? Small Enterprise, Aid and Employment in Africa

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  • John Page
  • Måns Söderbom

Abstract

Aid providers frequently link supporting small firms to job creation. Small firms create about half of new jobs in Africa, but they also have higher failure rates. Ignoring firm exit exaggerates net employment growth. Using panel data for Ethiopia, we find that small and large enterprises create similar numbers of net jobs. Moreover, wages in small firms are persistently lower. To create more 'good' jobs aid should target the constraints to the growth of firms of all sizes.

Suggested Citation

  • John Page & Måns Söderbom, 2012. "Is Small Beautiful? Small Enterprise, Aid and Employment in Africa," WIDER Working Paper Series wp-2012-094, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp-2012-094
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    File URL: https://www.wider.unu.edu/sites/default/files/wp2012-094.pdf
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    References listed on IDEAS

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