Comparing Small Business Employment in the U.S. and Europe

The Center for Economic and Policy Research (CEPR) recently published a study looking at the rates of small business employment among OECD countries. 

According to the report, the key finding of the study is: “By every measure of small-business employment, the United States has among the world’s smallest small-business sectors.”

Lots of studies have shown that wealthier countries tend to have lower levels of self and small business employment than less wealthy countries.  So we weren't surprised that the US - one of the wealthier OECD countries - would be near the bottom in terms of small business employment measures. 

We decided to compare the small business sector of the U.S. with the European Union.  Since the two have similar wealth levels, this reduces the bias introduced by using OECD country level data. 

Below is a chart showing the percentage of the total workforce that is employed by small businesses in the U.S. and Europe (EU 27) in 2005.  We adjusted the raw data due to small business definition differences between the the U.S. and the EU.  

            

As the chart shows, the percentage of Americans working for small businesses is very close to the percentage of Europeans.  Given the different definitions and data collection measures used, I think it is fair to say they are roughly the same.

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