Contrary to widespread perceptions and rhetoric across the ideological spectrum, small businesses are not the main engine of job creation. A Swedish economic paper underscores this global economic fact by analyzing business registry records on over 2 million establishments from 2005 to 2009. Thomas Astebro and Joacim Tag find that the average Swedish startup that survives into its second year of operation creates just 0.6 net new jobs for the economy. If it survives into its sixth year, then it creates an average of 0.9 net new jobs. In fact, after aggregating the data, the authors find that the jobs lost from startups going out of business far exceeded the number of jobs created by staying in operation.
For more on this topic, see Robert D. Atkinson and Michael Lind’s new book Big Is Beautiful: Debunking the Myth of Small Business.
