Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

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
Additional contact information
Michael Anyadike-Danes: Aston Business School and Enterprise Research Centre, UK
Carl Magnus Bjuggren: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Sandra Gottschalk: ZEW, Germany
Werner Hölzl: WIFO, Austria
Dan Johansson: HUI Research, Postal: and Örebro University
Mika Maliranta: ETLA, Postal: and University of Jyväskylä, Finland
Anja Myrann: Ragnar Frisch Centre for Economic Research, Norway

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

JEL-codes: E24; L25; M13

38 pages, First version: April 24, 2014. Revised: November 30, 2014.

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