The Determinants of Employment Creation in Small Regional Firms

The factors that guide employment decisions of small firms in a region of Greece are examined. The determinants of employment were theorized as demand uncertainty, as a measure of all elements of "capital," and as production volume. Other pertinent issues include the effect of European Union integration on regional employment levels, the factors guiding employment decisions of private enterprises, and the effect of heterogeneity on productivity and employment level.The final data set for this study was collected via questionnaires and in-person interviews, with 24 firms from different industries in Aitoloakarnania, a region in the central western part of Greece responding. A regression analysis was used to analyze the data. Statistically significant findings indicate that employment is positively correlated to sales, to the amount of paperwork, to the usage of new production processes, and to openness to new ideas. No significant qualitative difference was noted when distinguishing between genders. However, the results did indicate that female employment was more difficult to account for and that firms employing females were often more innovative. Possible limitations of these findings and areas for future research are presented. (AKP)