Of Mice and Unemployed: Rethinking Micro-enterprise and Small Business Policies in the EU

Exploring the complex relationship between firm size and job creation

MFC Policy Paper No. 3 discusses the complex relationships between firms size and job creation in the EU which shows that there is a need to better understand the dynamics of the job creation and destruction process. Promoting jobs through self-employment and small businesses is an alternative strategy that carries high hopes and attracts a lot of policy attention on the theory that small businesses create the majority of jobs in the economy. However, despite the widespread support for small business startups – from entry to the growth dynamics in the first years of their existence – their role for job creation is not well understood and the policies may be following the wrong prescriptions.

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