Job Generation in the UK Corporate Sector, 1986-95

We study the growth of employment at the company level using a very large database of company accounts. More than 31,000 independent companies are studied over 1986-95, though we concentrate particularly on the 8,103 companies which survived throughout the period. Using Galtonian regression, we find that smaller companies grew relatively to larger ones in each of the cyclical phases studied, 1986-89, 1989- 92 and 1993-95. But their advantage diminished steadily. These results also hold when the data are disaggregated by SIC Division. In addition, we find a robust, negative effect of age: younger companies grew faster than older ones. Despite the negative effect of size on employment growth, it does not necessarily follow that smaller companies create more jobs. The largest companies (over 131,000 employees) did shed employment on a large scale but despite this over half the net new jobs created in survivors were in companies with more than 500 employees.