This paper analyzes a relationship between establishment size and gross job creation and destruction in the U.K. during the 1980's. I find that the gross job creation rate is highest in small plants and lowest in large ones. In contrast, the gross job destruction rate is lowest in small plants and highest in large ones. In absolute numbers, however, large plants create, but also destroy most jobs. I test convergence in plant size by computing Markov transition matrices. The advantage of this approach is that it avoids Galton's fallacy of regression towards the mean and that it reflects job creation and destruction between size classes. I find no evidence of convergence, hence no regression towards the mean.
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Economics and Econometrics