An Empirical Assessment of the Contribution of Small Business Employment to U. S. State Economic Performance

Small business proponents regularly couple their arguments for favorable government policies and reduced tax and regulatory burdens, to the presumed benefits of increased proportions of small versus large-sector employment. Though regularly espoused at both the state and national level, these presum...

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Bibliographic Details
Published in:Small business economics 2000-12, Vol.15 (4), p.293-302
Main Authors: Robbins, D. Keith, Pantuosco, Louis J., Parker, Darrell F., Fuller, Barbara K.
Format: Article
Language:English
Subjects:
Business economics
Business expansion
Business structures
Employment
Inflation rates
Labor markets
Small businesses
Unemployment
Unemployment rates
Wages
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Summary:Small business proponents regularly couple their arguments for favorable government policies and reduced tax and regulatory burdens, to the presumed benefits of increased proportions of small versus large-sector employment. Though regularly espoused at both the state and national level, these presumptions regarding the benefits of small business employment remain an empirical issue. Are the presumed benefits a reality? A panel analysis of 48 U.S. States for a ten-year period was used to evaluate the contribution of small businesses to growth in productivity, growth in Gross State Product (GSP), unemployment, and wage inflation at the state level. The system of simultaneous equations revealed that states with higher proportions of very small business employment do indeed experience higher levels of productivity growth, and Gross State Product growth, while having less wage inflation and lower unemployment rates.
ISSN:0921-898X
1573-0913