SMALL BUSINESS AND JOB CREATION - DISSECTING THE MYTH AND REASSESSINGTHE FACTS (REPRINTED FROM LABOR-MARKETS-EMPLOYMENT-POLICY-AND-JOB-CREATION, 1994)

This paper investigates how job creation and destruction behavior vari es by employer size in the U.S. manufacturing sector during the period 1972 to 1988. The paper also evaluates the empirical basis for conven tional claims about the job-creating prowess of small businesses. The chief findings and conclusions fall into five categories: (1) Conventi onal wisdom about the job-creating prowess of small businesses rests o n misleading interpretations of the data. (2) Many previous studies of the job creation process rely upon data that are not suitable for dra wing inferences about the relationship between employer size and job c reation. (3) Large plants and firms account for most newly-created and newly-destroyed manufacturing jobs. (4) Survival rates for new and ex isting manufacturing jobs increase sharply with employer size. (5) Sma ller manufacturing firms and plants exhibit sharply higher gross rates of job creation but not higher net rates.