Secondary Sources: Small Business Job Creation, Fiscal State of the Union ... - Wall Street Journal (blog)

A roundup of economic news from around the Web.

–Small Business Job Creation: John Robertson looks at the connection between small businesses and job creation. “Economic research published last month by John Haltiwanger, Ron Jarmin, and Javier Miranda provides some compelling evidence on the relationship between firm size and job growth. It turns out that the age of a firm is important independent of its size. In particular, the paper finds no systematic relationship between net job growth rates and firm size after controlling for firm age? This finding doesn’t imply that firm size is irrelevant, but size matters mainly because, conditional on survival, young firms grow faster than older firms and tend to be small. In other words, because start-ups tend to be small, most of the truth to the popular perception that small businesses create the most jobs is driven by the contribution of start-ups to net job growth.”

–Fiscal State of the Union: Len Burman says the president should be give an annual explanation of the fiscal health of the nation. “The problem with our fiscal challenges is that they aren?t news. We have a large unsustainable debt burden, just like we did yesterday and the day before and will have tomorrow. It?s news when we run exceptionally high deficits, as we have for the last couple of years, or when we achieve surpluses, as we did briefly at the end of the Clinton Administration. But there?s no event that captures the media?s and the public?s attention, and the problem will only grow worse as giant deficits become old news. There?s little chance for the media to educate the public about the debt and possible solutions. An annual Fiscal State of the Union Address would change that. There would be news coverage. There would be serious discussion of the causes, consequences, and possible remedies to the problem of too much debt. There would be pressure on the president to have some good news to announce as part of the speech, and enough media scrutiny to guarantee that it wasn?t just smoke and mirrors. There would be pressure on the opposition to put forward a coherent plan to do better than the president, not just warmed over rhetoric and platitudes.”

–Economics of Lobbying: Jordi Blanes i Vidal, Mirko Draca and Christian Fons-Rosen examine how political connections are valued for lobbyists. “Lobbying in the US, as well as other democracies, is big business. This column investigates the extent to which former government officials ?cash in? on their political connections when working as lobbyists. It finds that once the politician for whom they worked leaves office, their revenue falls 20%, or $177,000 per year, suggesting that lobbyists are paid more for ?who they know? than ?what they know?.

Compiled by Phil Izzo

View the original article here