Job Creation and Firm Size in the U.S. and West Germany

Abstract

ZOLTAN J. ACS and DAVID B. AUDRETSCH are research fellows at the Wissenschaftszentrum Berlin fur Sozialforschung, Berlin. This paper uses a new data base recently made available by the United States Small Business Administration to examine how the pattern of job generation varies across different firm sizes. This enables the authors to examine the relationship between job generation and firm size in the U.S. They find that small firms have been the major source of new jobs in manufacturing, services and the finance sector as well as for the aggregate economy. This has resulted in a significant shift in the share of employment accounted for by small firms between 1976 and 1982. However, there does not appear to be any evidence that small firms are becoming more pervasive in highly innovative industries. No similar trend in job generation is discernible in