MODERN tools of data analysis — fast computers, smart software and vast troves of digital information — often open the door to new insights. Consider the subject of jobs in America.
For decades, the assumption has been that small business is the economy’s dynamic engine of job generation. Look at the numbers broadly, and that is the irrefutable conclusion: two-thirds of net new jobs are created by companies with fewer than 500 employees, which is the government’s definition of a small business.
But research published last month by three economists, working with more recent and detailed data sets than before, has found that once the age of the businesses is taken into account, there is no difference in the job-producing performance of small companies and big ones.
“Size plays virtually no role,” says John C. Haltiwanger, a co-author of the study and an economist at the University of Maryland. “It’s all age — start-ups are where the job-creation action really occurs.”
FOREIGN-BORN entrepreneurs have long played a big role in American start-ups. A study that tracked technology and engineering start-ups from 1995 to 2005 found that one quarter of them had a foreign-born chief executive or head technologist; by 2005, the surviving companies generated $52 billion in sales and employed 450,000 workers.
There are signs that policy makers are looking to accommodate highly skilled workers and entrepreneurs, says Robert Litan, an economist at the Kauffman Foundation. As one example, he points to legislation proposed this year by Senators John Kerry, Democrat of Massachusetts, and Richard G. Lugar, Republican of Indiana. Called the Start-Up Visa Act, it would grant visas to immigrant entrepreneurs who create jobs in the United States.
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