This paper explores the so-called small business job creation hypothesis. There are several significant findings. Firstly, we found that the base-size and current-size measures produce different results for the net job creation rate which is consistent with the results published by Davis et al. (Small Bus Econ, 8(4):297–315, 1996a, Job creation and destruction. MIT Press, Cambridge, MA, 1996b). These discrepancies suggest that further investigation of the extent of bias in the calculation of gross and net job flows for small business was warranted. Secondly, we also discovered that the number of inter-class plants is small. However, a large percentage of job creation and destruction is due to inter-class plants which suggest that the use of the base-size measure may involve significant regression bias. Thirdly, we discovered that in terms of job creation and destruction shares, the extent of regression bias of small business should be treated with caution. Finally, we found that the current-size measure largely addresses regression bias with respect to job creation and destruction treated separately.
Quality & Quantity – Springer Journals
Published: Sep 14, 2011
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