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Title:Do small businesses create more jobs? New evidence for the United States from the National Establishment Time Series PDF Logo
Authors:Neumark, David
Wall, Brandon
Zhang, Junfu
Issue Date:2008
Series/Report no.:IZA discussion papers 3888
Abstract:We use a new database, the National Establishment Time Series (NETS), to revisit the debate about the role of small businesses in job creation. Birch (e.g., 1987) argued that small firms are the most important source of job creation in the U.S. economy. But Davis et al. (1996a) argued that this conclusion was flawed, and based on improved methods and using data for the manufacturing sector, they concluded that there was no relationship between establishment size and net job creation. Using the NETS data, we examine evidence for the overall economy, as well as for different sectors. The results indicate that small firms and small establishments create more jobs, on net, although the difference is much smaller than what is suggested by Birch's methods. Moreover, in the recent period we study, a negative relationship between establishment size and job creation holds for both the manufacturing and services sectors.
Subjects:Job creation
job destruction
small businesses
JEL:J20
L25
L53
Persistent Identifier of the first edition:urn:nbn:de:101:1-20081219107
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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