Working Paper: NBER ID: w16300
Authors: John C. Haltiwanger; Ron S. Jarmin; Javier Miranda
Abstract: The view that small businesses create the most jobs remains appealing to policymakers and small business advocates. Using data from the Census Bureau Business Dynamics Statistics and Longitudinal Business Database, we explore the many issues at the core of this ongoing debate. We find that the relationship between firm size and employment growth is sensitive to these issues. However, our main finding is that once we control for firm age there is no systematic relationship between firm size and growth. Our findings highlight the important role of business startups and young businesses in U.S. job creation.
Keywords: Job Creation; Firm Size; Firm Age; Business Dynamics
JEL Codes: E24; L25; L26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm size (L25) | net employment growth (without controlling for firm age) (L26) |
| firm age (L10) | net employment growth (with controls for firm age) (L26) |
| firm size (L25) | net employment growth (with controls for firm age) (L26) |
| firm births (G24) | job creation (J68) |
| firm age (L10) | job creation and destruction (J63) |