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Job Creation, Job Destruction and the Contribution of Small Businesses: Evidence for UK Manufacturing

Author

Listed:
  • Matthew Barnes

    (Queen Mary, University of London)

  • Jonathan Haskel

    (Queen Mary, University of London)

Abstract

We use the ARD micro level data set for UK manufacturing to document job creation and job destruction (JC&D). Due to data limitations, previous UK studies were unable to use entry and exit in calculations of JC&D and/or were are at the firm rather than establishment/plant level and/or used data that understate the number of small businesses in the economy. Our data can overcome these problems being based on plant and establishment-level data from the UK Census of Production. We compute JC&D levels and rates and the contribution of small businesses for UK manufacturing between 1980 and 1991 and compare our findings with previous UK studies and other countries. We find: a) establishment (plant) job creation and destruction rates of 10.0% and 13.5% (11.2% and 14.7%) respectively, higher than other studies; b) large establishments (plants) are responsible for about 60% (55%) of job destruction; and c) small establishments (plants) are responsible for between 50% and 68% (57% and 70%) of job creation, depending on calculation method.

Suggested Citation

  • Matthew Barnes & Jonathan Haskel, 2002. "Job Creation, Job Destruction and the Contribution of Small Businesses: Evidence for UK Manufacturing," Working Papers 461, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:461
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    References listed on IDEAS

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    2. David G. Blanchflower & Simon M. Burgess, 1996. "Job Creation and Job Destruction in Great Britain in the 1980s," ILR Review, Cornell University, ILR School, vol. 50(1), pages 17-38, October.
    3. Haskel, Jonathan & Heden, Ylva, 1999. "Computers and the Demand for Skilled Labour: Industry- and Establishment-Level Panel Evidence for the UK," Economic Journal, Royal Economic Society, vol. 109(454), pages 68-79, March.
    4. Konings, Jozef, 1995. "Job Creation and Job Destruction in the UK Manufacturing Sector," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 5-24, February.
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    Cited by:

    1. Elena Cefis & Roberto Gabriele, 2005. "Does Spatial Disaggregation Matter in Job Creation and Destruction Flows?," LEM Papers Series 2005/09, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Pagés, Carmen & Micco, Alejandro, 2004. "Employment Protection and Gross Job Flows: A Differences-in-Differences Approach," IDB Publications (Working Papers) 1106, Inter-American Development Bank.
    3. Schnabel, Claus & Kohaut, Susanne & Brixy, Udo, 2008. "Employment Stability of Entrants in Newly Founded Firms: A Matching Approach Using Linked Employer-Employee Data from Germany," IZA Discussion Papers 3353, Institute of Labor Economics (IZA).
    4. Vergara, Sebastián, 2005. "The dynamic of employment in Chilean industry," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    5. Fotini Voulgaris & Theodore Papadogonas & George Agiomirgianakis, 2005. "Job Creation and Job Destruction in Greek Manufacturing," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 289-301, May.
    6. Marcela Eslava & John Haltiwanger & Álvaro Pinzón, 2022. "Job Creation in Colombia Versus the USA: ‘Up‐or‐out Dynamics’ Meet ‘The Life Cycle of Plants’," Economica, London School of Economics and Political Science, vol. 89(355), pages 511-539, July.
    7. Marcela Eslava & John C. Haltiwanger & Alvaro Pinzón, 2019. "Job creation in Colombia vs the U.S.: “up or out dynamics” meets “the life cycle of plants”," NBER Working Papers 25550, National Bureau of Economic Research, Inc.
    8. Bergner, Sören Martin & Bräutigam, Rainer & Evers, Maria Theresia & Spengel, Christoph, 2017. "The use of SME tax incentives in the European Union," ZEW Discussion Papers 17-006, ZEW - Leibniz Centre for European Economic Research.
    9. David Neumark & Brandon Wall & Junfu Zhang, 2008. "Do Small Businesses Create More Jobs? New Evidence from the National Establishment Time Series," NBER Working Papers 13818, National Bureau of Economic Research, Inc.
    10. Luz Adriana Flórez & Leonardo Morales Z & Daniel Medina & José Lobo C, 2017. "Labour flows across firm´s size, economic sectors and wages in Colombia: evidence from employer-employee linked panel," Borradores de Economia 1013, Banco de la Republica de Colombia.
    11. Brixy, Udo & Kohaut, Susanne & Schnabel, Claus, 2004. "How fast do newly founded firms mature? Empirical analyses on job quality in start-ups," Discussion Papers 30, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    12. Micco, Alejandro & Pagés, Carmen, 2006. "The Economic Effects of Employment Protection: Evidence from International Industry-Level Data," IZA Discussion Papers 2433, Institute of Labor Economics (IZA).
    13. Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "Job Creation, Job Destruction and the Role of Small Firms: Firm‐Level Evidence for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(5), pages 621-647, October.
    14. Jacek Socha, 2006. "Tworzenie i likwidacja miejsc pracy w sektorze przedsiębiorstw w Polsce," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5-6, pages 1-20.
    15. Alejandro Micco - Carmen Pages, 2004. "Employment Protection and Gross Job Flows1," Econometric Society 2004 Latin American Meetings 295, Econometric Society.
    16. Alejandro Micco & Carmen Pagés-Serra, 2004. "Protección del empleo y flujo bruto de puestos de trabajo: un enfoque de diferencias en diferencias," Research Department Publications 4366, Inter-American Development Bank, Research Department.
    17. Elena Cefis & Roberto Gabriele, 2009. "Spatial disaggregation patterns and structural determinants of job flows: an empirical analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(1), pages 89-111.
    18. Sasan Bakhtiari, 2012. "Small Business Redefined: A Quasi-Linear Fuzzy Classification of Firm Size," Discussion Papers 2012-24, School of Economics, The University of New South Wales.
    19. Carmen Pagés-Serra & Alejandro Micco, 2008. "Efectos económicos de la protección del empleo: Elementos de juicio a partir de datos internacionales a nivel de actividad económica," Research Department Publications 4497, Inter-American Development Bank, Research Department.
    20. Marco Corsino & Roberto Gabriele & Sandro Trento, 2010. "Job flows in Italian SMEs: a longitudinal analysis of growth, size and age," DISA Working Papers 1008, Department of Computer and Management Sciences, University of Trento, Italy, revised 22 Dec 2010.
    21. Heckmann, Markus & Schnabel, Claus, 2005. "Überleben und Beschäftigungsentwicklung neu gegründeter Betriebe," Discussion Papers 39, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    22. Luz A. Flórez & Leonardo Fabio Morales & Daniel Medina & José Lobo, 2021. "Labor flows across firm size, age, and economic sector in Colombia vs. the United States," Small Business Economics, Springer, vol. 57(3), pages 1569-1600, October.
    23. Kuhn, Johan M. & Malchow-Møller, Nikolaj & Sørensen, Anders, 2016. "Job creation and job types – New evidence from Danish entrepreneurs," European Economic Review, Elsevier, vol. 86(C), pages 161-187.
    24. Brons, Lajos, 2004. "On the Ontology of Events in Demographies of Organizations," MPRA Paper 1610, University Library of Munich, Germany, revised 2006.

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    More about this item

    Keywords

    Small firms; Job creation and destruction;

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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