Understanding the Theoretical and Empirical Content of Critiques of U.S. Job Creation Research

Although the hypothesis that small firms create the majority of net new jobs is widely believed, a number of researchers have attacked this using empirical data. Since these attacks have been presented as corrections of past methodological errors, their authors may influence policy makers. This paper argues that the substance of these attacks is a difference in theoretical perspectives even though the researchers claim to focus on methodological differences. This paper explains the two underlying economic theories and then reviews the job creation research to demonstrate the relationship between theory and methodology.