Small Business and Job Creation in The United States: The Role of New and Young Businesses



There is widespread agreement that employer size matters for a variety of economic outcomes. Previous academic research convincingly establishes strong connections between employer size and important economic outcomes like the level and inequality of wages, the incidence of fringe benefits, workforce quality, the pace of technological innovation and adoption, and the likelihood of unionization.1 The public discourse about the role of employer size has focused primarily on the contribution of small businesses to job creation.2 However, there is less agreement about this aspect of the role of employer size. The widely cited claim that small businesses are the primary creators of jobs in the United States derives primarily from a couple of studies by Birch (1979, 1987) and many reports from the U.S. Small Business Administration (SBA). Recently, Davis, Haltiwanger, and Schuh (1994, 1996) examined these studies on small businesses and job creation and raised a variety of conceptual, methodological, and measurement questions.3


Small Business Firm Size Small Firm Employment Growth Small Business Administration 
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Copyright information

© Springer Science+Business Media New York 1999

Authors and Affiliations

  1. 1.U.S. Bureau of the Census and University of MarylandCollege ParkUSA

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