Unravelling the facts about job generation

The purpose of this paper is to provide some new and useful perspectives to assist our understanding of the job creation process; especially of the relative capacities of small and large firms to create jobs. Through an initial discussion of components of change analysis, it is shown that (dynamic) job change can often be attributed to (static) size cohorts of firms in an illogical fashion. Also, change which results from firms oscillating in and out of neighbouring size cohorts has continued to be confused with shifts in employment levels which are of a long term nature. Job generation analysis has tended to ignore the role of the stable firm. However, both small and large firms, which tend to exhibit low levels of internal job change, are performing a fundamental and important task in terms of simply sustaining jobs. In the author's opinion, ''traditional'' methodologies used to investigate job creation in any economy have tended to distort our understanding of job creation and loss. Recommendations for alternatives, especially those which incorporate a temporal element into the ''job'' variable, are put forward.