Employment Generation by Small Firms in Spain

39 Pages Posted: 6 Mar 2009

See all articles by Paloma Lopez-Garcia

Paloma Lopez-Garcia

European Central Bank (ECB)

Sergio Puente

Banco de España

Ángel Luis Gómez

Banco de España

Date Written: March 4, 2009

Abstract

Despite the relevance in terms of policy, we still know little in Spain about where and by whom jobs are created, and how that is affecting the size distribution of firms. The main innovation of this paper is to use a rich database that overcomes the problems encountered by other firm-level studies to shed some light on the employment generation of small firms in Spain. We find that small firms contribute to employment disproportionately across all sectors of the economy although the difference between their employment and job creation share is largest in the manufacturing sector. The job creators in that sector are both new and established firms whereas only new small firms outperform their larger counterparts in the service sector. The large annual job creation of the small firm size class is shifting the firm size distribution towards the very small production units, although not uniformly across industries of different technology intensity.

Keywords: Firm-level data, employment creation and destruction, firm size distribution

JEL Classification: L11, L53, J21

Suggested Citation

Lopez-Garcia, Paloma and Puente, Sergio and Gómez, Ángel Luis, Employment Generation by Small Firms in Spain (March 4, 2009). Banco de Espana Occasional Paper No. 0903. Available at SSRN: https://ssrn.com/abstract=1353919 or http://dx.doi.org/10.2139/ssrn.1353919

Paloma Lopez-Garcia (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Sergio Puente

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Ángel Luis Gómez

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

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