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Small businesses have historically been the driver of job creation in the United States economy. During the Global Financial Crisis, small firms were hit disproportionately hard, resulting in a hampered labor sector that has still not fully recovered. Due to the strong role that small firms have played in creating past jobs, combined with the observed slow recovery of the labor markets, it is relevant to ask what (if at all anything) this implies? This paper explores this question in further depth and reveals some interesting findings. Most importantly, the policy responses to this financial crisis were primarily supply-side oriented. Based on this observation, I take a theoretical approach to show that demand-oriented policy would have been a more effective recovery method. This, I argue is based on the belief that the most important goal for small firms is to make sales (not to cut costs through tax incentives, or to expand through having access to credit).
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This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.
Eddy, Nicolai J., "The Significance of Small Businesses in the U.S. Economy Post Financial Crisis" (2014). Senior Projects Spring 2014. 44.