Do Small Businesses Create More Jobs? New Evidence for Europe

Jan de Kok and Gerrit de Wit

No H201203, Scales Research Reports from EIM Business and Policy Research

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.

Pages: 23 pages
Date: 2013-04-09
New Economics Papers: this item is included in nep-bec and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Do small businesses create more jobs? New evidence for Europe (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eim:papers:h201203

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