census for firms with at least 10 employees from 1997 to 2007, reporting that firms employing fewer than 50 account for a scant 15% of total employment. However by excluding services firms as well as manufacturers with fewer than 10 employees this is likely a substantial underestimate: a survey conducted by the country’s Central Statistical Agency (CSA) in 2011 shows that manufacturing firms with fewer than 10 workers<sup>18</sup> employed three times the total generated by all manufacturing firms with 10 or more employees (CSA, 2012, 2013). Hasan and Jandoc (2009) further illustrate the effect of this low-end censoring in India. They combine data from the annual manufacturing census of formally registered firms, conducted by India’s Central Statistical Organization, with a similar dataset for unregistered manufacturing firms. They report that micro enterprises (with 1 to 5 employees) account for about 84% of total employment in manufacturing, while those with 200 or more employees account for only 10%. Excluding single-employee operations does not qualitatively change the picture: firms with 5 to 49 employees account for nearly 60% of the total manufacturing employment (ADB 2009).

Another important dimension in this debate is whether younger or older firms are more important in the share of stock of employment. Here there is greater consensus: older firms appear to be the most important contributors to the stock of employment, in developing and developed countries alike. In their recent comprehensive study for the US, Haltiwanger et al (2013) report that mature firms (10+ years) account for over 70% of the employment stock on average between 1992 and 2005. Further, Criscuolo et al (2014) also show that contributions to employment stock increases with firm age. In particular, mature firms account for over 60% of total employment. What is more, within each size category, older firms account for the largest share of employment stock, indicating that the results are not driven by the positive association between firm age and size. Klette and Mathiassen (1996) report similar results for Norway, showing that the share of the stock of employment steeply increases with firm age; in fact, firms 15 years or older alone account for over 85% of the total manufacturing sector employment.

The predominance of older firms holds in developing economies as well. Rijkers et al (2014) report that for Tunisia, employment shares increase with firm age, noting that firms that are 10 years or older account, on average, for about half of the total employment stock. Similarly, Ayyagari et al (2014) report that older firms, 11+ years of age, are the largest contributors to employment; large-old firms alone, for instance, account for about 35% of the total stock in their study. Eslava and Haltiwanger (2014) provide similar results using manufacturing census data in Colombia, noting that – at least among firms with 10 or more employees – the share of employment stock increases with age.

> 18 This survey excludes handcraft and cottage manufacturing establishments and is restricted to manufacturing establishments with less than 10 employees that utilize power-driven machines to produce goods and services.

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