Publication: SMEs, Age, and Jobs: A Review of the Literature, Metrics, and Evidence
Date
2015-11
ISSN
Published
2015-11
Author(s)
Aga, Gemechu
Francis, David C.
Rodriguez Meza, Jorge
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.
Citation
“Aga, Gemechu; Francis, David C.; Rodriguez Meza, Jorge. 2015. SMEs, Age, and Jobs : A Review of the Literature, Metrics, and Evidence. Policy Research Working Paper;No. 7493. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/23455?show=full License: CC BY 3.0 IGO.”
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