Who creates jobs?

Date posted: October 14, 2010

The No. 1 economic issue in the country is jobs. What kind of businesses typically create new jobs: large, small or start-up businesses? N.C. Cooperative Extension economist Mike Walden discusses new research that takes this question in a different direction.

“The working conclusion that we have used to date has been that most new jobs are created by small businesses, small companies, small firms. However, we now have some new research that says it’s actually the age of the company — not the size of the company — that is more important. In fact, the research that has been done shows that when you account for a firm’s age, the relationship between job creation and firm size actually disappears — that it is really new firms, firm start-ups if you will, that … disproportionately account for job creation.

“For example, the evidence that we have now is that firm start-ups — these are new companies that are just starting — they account for only 3 percent of total jobs, but they are responsible for creating 20 percent of new jobs.

“So I think this is a new piece of very important evidence that it is not small firms, but it is new firms, regardless of their size — small, medium or large — that is important in job creation.”

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