Job Creation, Job Destruction and Small Firms: Evidence for the UK

We use the newly available ARD establishment level data set for UK manufacturing to document job creation and job destruction. With these data we can document job creation and destruction more fully than in previous studies. Due to data limitations, some studies are forced to ignore the contribution of entry and exit of firms to job creation destruction or use data that understate the number of small firms in the economy. We compute both the levels and rates of job creation and destruction between 1980 and 1991 and compare our findings with these previous studies of the UK and work carried out in other countries. We find: a) jc 7d rates of 10.0% and 13.5% respectively, higher job creation and destruction rates than other studies; b) large firms are responsible for about 60% of job destruction; and c) small firms are responsible for about between 50% and 68% of job creation, depending on calculation method.. Contact address: Matthew Barnes, Department of Economics, Queen Mary, University of London, Mile End Road, London E1 4NS, England; , . For financial support we thank the Leverhulme Trust for grant F/07476A. Completed as part of the ONS Business Data Linking Project. Thanks also to Wendy Fader, Andrew Ross and staff at ONS for help in preparing the data. For useful comments on earlier drafts we thank Richard Disney, seminar participants at Queen Mary, participants at the IZA Employer-Employee Data workshop, November 2000 and Richard Harris and participants at the Royal Economic Society Conference 2001. Errors are our own.