Who Creates Jobs? Small versus Large versus Young

TLDR

The view that small businesses create the most jobs remains appealing to policymakers and small business advocates. The study uses Census Bureau Business Dynamics Statistics and Longitudinal Business Database data to examine key issues in the debate. After controlling for firm age, there is no systematic relationship between firm size and employment growth, underscoring the crucial role of young businesses in U.S.

Abstract

The view that small businesses create the most jobs remains appealing to policymakers and small business advocates. Using data from the Census Bureau's 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 start-ups and young businesses in U.S. job creation.