Job creation and destruction in the corporate sector: the relative importance of births, deaths…

A major new database (OneSource) of UK companies is used to estimate the contribution of independent companies of all sizes to employment change in the corporate sector over the period 19901992. Our estimates cover jobs gained and lost by corporate births and deaths as well as employment change in surviving companies. There is no tendency for the corporate birth rate to decrease monotonically with increases in company size and there is certainly no case for postulating that new companies tend to have one optimum size such as Minimum Efficient Scale. In contrast, the corporate death rate does decrease with increases in company size. Over this period the net effect of births and deaths was negative for virtually all sizes of company. Overall, 0.614 million jobs were gained by births but 1.119 million lost by deaths. Another 600 thousand jobs were lost in surviving companies. Much of this loss occurred in large companies but medium size companies (33-512 employees) also shed jobs in large numbers. Taking account of births, deaths and survivors, only companies with 1-8 employees were net creators of jobs over this period. But the absolute numbers created were fairly small to set against losses amongst larger companies.