IDEAS home Printed from https://ideas.repec.org/a/sae/ecdequ/v31y2017i2p116-127.html
   My bibliography  Save this article

Weak Foundations in Economic Development Programs

Author

Listed:
  • Hart Hodges
  • Steven E. Henson

Abstract

The existing literature on the relationship between employment growth and firm characteristics (such as firm age, size, and sector) has been used to justify a variety of economic development policies and job creation programs. Some of the programs highlight the importance of small firms, others emphasize the importance of young firms, and others highlight the importance of older, more established firms. The fact that each of these programs can find something in the literature that supports its particular focus suggests problems in the connection between the literature and policy formation. The authors find that the empirical support for such programs is weak. The statistical significance of firm characteristics depends critically on the model specification and/or data set used. Moreover, these characteristics explain only a small fraction of the variation in job growth, leaving policy makers with relatively weak policy tools.

Suggested Citation

  • Hart Hodges & Steven E. Henson, 2017. "Weak Foundations in Economic Development Programs," Economic Development Quarterly, , vol. 31(2), pages 116-127, May.
    • Handle: RePEc:sae:ecdequ:v:31:y:2017:i:2:p:116-127
    DOI: 10.1177/0891242417695458
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0891242417695458
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0891242417695458?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Deirdre N. McCloskey & Stephen T. Ziliak, 1996. "The Standard Error of Regressions," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 97-114, March.
    2. N. A. Phelps & R. J. Fallon & C. L. Williams, 2001. "Small Firms, Borrowed Size and the Urban-Rural Shift," Regional Studies, Taylor & Francis Journals, vol. 35(7), pages 613-624.
    3. Davis, Steven J & Haltiwanger, John & Schuh, Scott, 1996. "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Small Business Economics, Springer, vol. 8(4), pages 297-315, August.
    4. repec:bla:jecsur:v:16:y:2002:i:4:p:569-89 is not listed on IDEAS
    5. Erik Stam, 2010. "Growth beyond Gibrat: firm growth processes and strategies," Small Business Economics, Springer, vol. 35(2), pages 129-135, September.
    6. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    7. John C. Haltiwanger & Ron S. Jarmin & Javier Miranda, 2010. "Who Creates Jobs? Small vs. Large vs. Young," NBER Working Papers 16300, National Bureau of Economic Research, Inc.
    8. Kelly D. Edmiston, 2007. "The role of small and large businesses in economic development," Economic Review, Federal Reserve Bank of Kansas City, vol. 92(Q II), pages 73-97.
    9. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
    10. Tom Engsted, 2009. "Statistical vs. Economic Significance in Economics and Econometrics: Further comments on McCloskey & Ziliak," CREATES Research Papers 2009-17, Department of Economics and Business Economics, Aarhus University.
    11. Tom Engsted, 2009. "Statistical vs. economic significance in economics and econometrics: further comments on McCloskey and Ziliak," Journal of Economic Methodology, Taylor & Francis Journals, vol. 16(4), pages 393-408.
    12. Peter E. Kennedy, 2002. "Sinning in the Basement: What are the Rules? The Ten Commandments of Applied Econometrics," Journal of Economic Surveys, Wiley Blackwell, vol. 16(4), pages 569-589, September.
    13. Paul Hettler, 2007. "The Decomposition of Firm-size Wage Differentials," Journal of Labor Research, Springer, vol. 28(3), pages 477-486, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter J. Veazie, 2015. "Understanding Statistical Testing," SAGE Open, , vol. 5(1), pages 21582440145, January.
    2. Michael Anyadike-Danes & Mark Hart, 2018. "All grown up? The fate after 15 years of a quarter of a million UK firms born in 1998," Journal of Evolutionary Economics, Springer, vol. 28(1), pages 45-76, January.
    3. Jae H. Kim & Kamran Ahmed & Philip Inyeob Ji, 2018. "Significance Testing in Accounting Research: A Critical Evaluation Based on Evidence," Abacus, Accounting Foundation, University of Sydney, vol. 54(4), pages 524-546, December.
    4. Costas Arkolakis, 2016. "A Unified Theory of Firm Selection and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(1), pages 89-155.
    5. Kim, Jae H. & Ji, Philip Inyeob, 2015. "Significance testing in empirical finance: A critical review and assessment," Journal of Empirical Finance, Elsevier, vol. 34(C), pages 1-14.
    6. Canarella, Giorgio & Miller, Stephen M., 2018. "The determinants of growth in the U.S. information and communication technology (ICT) industry: A firm-level analysis," Economic Modelling, Elsevier, vol. 70(C), pages 259-271.
    7. Alexander Libman & Joachim Zweynert, 2014. "Ceremonial Science: The State of Russian Economics Seen Through the Lens of the Work of ‘Doctor of Science’ Candidates," Working Papers 337, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    8. Peter Huber & Harald Oberhofer & Michael Pfaffermayr, 2014. "Job creation and the intra-distribution dynamics of the firm size distribution," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 23(1), pages 171-197, February.
    9. Libman, Alexander & Zweynert, Joachim, 2014. "Ceremonial science: The state of Russian economics seen through the lens of the work of ‘Doctor of Science’ candidates," Economic Systems, Elsevier, vol. 38(3), pages 360-378.
    10. Plöckinger, Martin & Aschauer, Ewald & Hiebl, Martin R.W. & Rohatschek, Roman, 2016. "The influence of individual executives on corporate financial reporting: A review and outlook from the perspective of upper echelons theory," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 55-75.
    11. Kelly D. Edmiston, 2007. "The role of small and large businesses in economic development," Economic Review, Federal Reserve Bank of Kansas City, vol. 92(Q II), pages 73-97.
    12. Gavin Reid & Zhibin Xu, 2012. "Generalising Gibrat: using Chinese evidence founded on fieldwork," Small Business Economics, Springer, vol. 39(4), pages 1017-1028, November.
    13. Thomas Mayer, 2012. "Ziliak and McCloskey's Criticisms of Significance Tests: An Assessment," Econ Journal Watch, Econ Journal Watch, vol. 9(3), pages 256-297, September.
    14. Geurts, Karen & Van Biesebroeck, Johannes, 2016. "Firm creation and post-entry dynamics of de novo entrants," International Journal of Industrial Organization, Elsevier, vol. 49(C), pages 59-104.
    15. Ruud de Mooij & Michael Keen, 2012. ""Fiscal Devaluation" and Fiscal Consolidation: The VAT in Troubled Times," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 443-485, National Bureau of Economic Research, Inc.
    16. David Audretsch & Taylor Aldridge & Adam Lederer, 2010. "SMEs, Industry Dynamics and Economic Growth," Chapters, in: Jean-Luc Gaffard & Evens Salies (ed.), Innovation, Economic Growth and the Firm, chapter 3, Edward Elgar Publishing.
    17. Boehm, Christoph E. & Flaaen, Aaron & Pandalai-Nayar, Nitya, 2020. "Multinationals, Offshoring, and the Decline of U.S. Manufacturing," Journal of International Economics, Elsevier, vol. 127(C).
    18. Marco Capasso & Tania Treibich & Bart Verspagen, 2015. "The medium-term effect of R&D on firm growth," Small Business Economics, Springer, vol. 45(1), pages 39-62, June.
    19. Tóth, István János & Semjén, András & Czibik, Ágnes & Fazekas, Mihály & Németh, Nándor, 2013. "Munkaerő-keresleti előrejelzés vállalati várakozások alapján. Két vállalati adatfelvétel tanulságai [Labour-demand forecasting based on business expectations. Lessons learned from two consecutive e," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 189-223.
    20. Sophia Chen, 2014. "Financial Constraints, Intangible Assets, and Firm Dynamics: Theory and Evidence," IMF Working Papers 2014/088, International Monetary Fund.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ecdequ:v:31:y:2017:i:2:p:116-127. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.