Sunday, February 19, 2012

Who says?


Everybody keeps telling us that small business is the "engine of job creation" in the United States, but it's not so clear. Following up a post from Ontario at Kos:
According to Who creates jobs? Small vs. large vs. young by John C. Haltiwanger, Ron S. Jarmin, and Javier Miranda, NBER Working Paper No. 16300 (2010), small business is not that much of a job creator. Looking at Census Bureau data for the decade from 1992 to 2005, they found that
businesses tend to create jobs in proportion to their importance in the economy. Thus, large mature firms—those more than ten years old and with more than 500 workers—employed about 45 percent of all private-sector workers and accounted for almost 40 percent of job creation and destruction in this study.
 Where small size of the firm had an effect, it wasn't because it was small but because it was new:
The real driver of disproportionate job growth, they find, is not small companies, but young companies. It is the startup firms that generate the surge of jobs that earlier research attributed to small companies.
After which they sell out to Microsoft (that's the program), or fold and put together a job-creating emo band or gourmet taco truck.

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