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Research Institute of Industrial Economics (IFN) Working Paper Series

No 1019:
An International Cohort Comparison of Size Effects on Job Growth

Michael Anyadike-Danes, Carl Magnus Bjuggren (), Sandra Gottschalk, Werner Hölzl, Dan Johansson (), Mika Maliranta and Anja Myrann

Abstract: The contribution of different-sized businesses to job creation continues to attract policymakers’ attention, however, it has recently been recognized that conclusions about size were confounded with the effect of age. We probe the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life, using variation across half a dozen northern European countries Austria, Finland, Germany, Norway, Sweden, and the UK to pin down size effects. We find that a very small proportion of the smallest firms play a crucial role in accounting for cross-country differences in job growth. A closer analysis reveals that the initial size distribution and survival rates do not seem to explain job growth differences between countries, rather it is a small number of rapidly growing firms that are driving this result.

Keywords: Birth cohort; Firm age; Firm size; Firm survival; Firm growth; (follow links to similar papers)

JEL-Codes: E24; L25; M13; (follow links to similar papers)

38 pages, April 24, 2014, Revised November 30, 2014

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