Again, Haltiwanger et al (2013) add a further twist to the debate. They show that the inverse relationship between firm size and _net job growth_ persists even when the average measure of firm size is used. However, an interesting pattern emerges once start-up firms are singled out and treated separately. Start-up firms account for a large share of net job creation in almost all firm size classes, and particularly so among small firms. To disentangle the effect of start-ups, the authors employ regression analyses, reporting that the negative association between firm size and _net job creation rates_ disappears (or becomes positive) once firm age is included, regardless of how firm size is measured.<sup>20</sup> In terms of job loss due to exit, there is an inverse relationship between size and exit, in line with findings elsewhere that small firms are more likely to exit than large ones.<sup>21</sup> They note, thus, “that the firms that have the most jobs create the most jobs, so workers looking for the places where the most jobs are being created should go where the jobs are: large and mature firms.” (p. 350). Since exit rates decline with firm age, the authors argue that this indicates the “up-or-out” phenomenon where new firms either grow fast or exit the market altogether.

Similar findings have been reported for other developed economies. Criscuolo et al (2014) show that small- and medium-young firms have higher net job growth rates than old-large firms (that is, firms 5 years or older and with 250 or more employees) in the 18 countries studied. Lawless (2014) likewise reports that firm size and _net job growth rates_ are negatively associated. However, as in Haltiwanger et al (2013), start-ups play an important role, and when they are removed from the analysis, _net job growth rates_ increase with firm size, lending support to the view that firm age is perhaps what truly matters. Although smaller firms exhibit high _gross job creation rates_ , they also have the highest _job destruction rates_ , resulting in a substantially negative _net job growth rate_ . The Hijzen et al (2010) study on the UK did not report the association between firm size and _net job creation rates._ However, they show that small firms, with fewer than 20 employees, contribute more to _gross job creation_ than they do to _job destruction_ . Further, jobs created by smaller firms are no less durable than the ones created by larger firms.

Ayyagari et al (2014) argue that SMEs are the main contributors to net job growth in most developing economies. Of the 104 countries in their sample, 85 have positive _net job growth rates_ . Among these, in the median country, firms employing 5 to 99 individuals account for about 75% of the total net jobs created. Moreover, in the 18 countries with negative _net job growth rates_ , small firms in fact registered positive _net job growth rate_ , meaning that job destruction by large firms (with 250+ employees) is so high as to outweigh the jobs created by small

> 20 It is important to note that even without controlling for firm age, the association between firm size and net job creation rates depends on how firm size is defined. Using average measure of firm size, the negative association disappears even without controlling for firm age and the association becomes positive when firm size is controlled for.

> 21 See, for instance, Jovanovic (1982); Pakes and Ericson (1998); Aldrich and Auster (1986); Aga and Francis (2015).

11