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

U of London Queen Mary Economics Working Paper No. 461

29 Pages Posted: 16 Oct 2002

See all articles by Matthew Barnes

Matthew Barnes

Better Regulation Executive, Cabinet Office

Jonathan Haskel

Imperial College Business School; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: May 2002

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.

Keywords: Small firms, job creation and destruction.

JEL Classification: H32, J23, J63, J68, L52, L60

Suggested Citation

Barnes, Matthew and Haskel, Jonathan, Job Creation, Job Destruction and the Contribution of Small Businesses: Evidence for UK Manufacturing (May 2002). U of London Queen Mary Economics Working Paper No. 461, Available at SSRN: https://ssrn.com/abstract=317179 or http://dx.doi.org/10.2139/ssrn.317179

Matthew Barnes (Contact Author)

Better Regulation Executive, Cabinet Office ( email )

4th Floor, 22 Whitehall
London, SW1A 2WH
United Kingdom

HOME PAGE: http://www.cabinetoffice.gov.uk/regulation

Jonathan Haskel

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom
020 7594 8563 (Phone)
020 7594 5915 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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