Accounting for Job Growth: Disentangling Size and Age Effects in an International Cohort Comparison

The contribution of different-sized businesses to job creation continues to attract policymakers’ attention, however, it has recently been recognized that conclusions about size were confounded with the effect of age. We probe the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life, using variation across half a dozen northern European countries Austria, Finland, Germany, Norway, Sweden, and the UK to pin down the effects. We find that a very small proportion of the smallest firms play a crucial role in accounting for cross-country differences in job growth.