Smes, Age, and Jobs: A Review of the Literature, Metrics, and Evidence

41 Pages Posted: 20 Apr 2016

See all articles by Gemechu Aga

Gemechu Aga

World Bank

David Francis

World Bank, Development Economics

Jorge Rodríguez-Meza

World Bank

Date Written: November 13, 2015

Abstract

The subject of which firms are the key employers?and which of these create or destroy jobs at a faster rate?is eminently important for academics and policy makers. The relative importance of small versus large firms and old versus young firms has in particular been extensively debated and studied. Nevertheless, the results often hinge on the questions that are asked. Moreover, the categorical definitions used to define firm size and age, and the nature and coverage of the data used have important effects. This paper lays out the relevant definitions and metrics that are central to the debate, reviewing the main findings to date on the subject (with particular emphasis on results in developing economies). The paper adds updated results for 117 developing economies using the World Bank?s Enterprise Survey Data, finding that (i) small and medium enterprises and older establishments are the dominant employers in the nonagricultural private sector labor force in developing economies, and (ii) net job creation is negatively correlated with establishment age and, although the effect of size is also negative, its significance is sensitive to the definition and methods used.

Keywords: Employment and Shared Growth, Equity and Development, Achieving Shared Growth, Pro-Poor Growth, Private Sector Development Law, Marketing, Private Sector Economics

Suggested Citation

Aga, Gemechu and Francis, David and Rodríguez-Meza, Jorge, Smes, Age, and Jobs: A Review of the Literature, Metrics, and Evidence (November 13, 2015). World Bank Policy Research Working Paper No. 7493, Available at SSRN: https://ssrn.com/abstract=2690632

Gemechu Aga (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

David Francis

World Bank, Development Economics ( email )

1818 H St NW
Washington, DC 20433
United States

Jorge Rodríguez-Meza

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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