Measuring the Effect of Small Business Employment on the Growth in Mississippi and Louisiana Communities

Abstract

We want to take a closer look at how these jobs provided by small businesses to the local communities affecting economic growth of Mississippi and Louisiana counties. The objective of this study is to measure the effect of small business employment on the economic growth of Mississippi and Louisiana communities, where economic growth is measured by the growth rate of per capita personal income between 2010 and 2012 after adjusting for inflation. Empirical tests involving a Solow-type growth model will be estimated. Small business employment is measured by the total employment of enterprise with 0 to 19, and 20 to 99 employees. Small business ownership is measured by the number of firms and establishments that employ 0 to 19, and 20 to 99employees. These variables are designed to measure the economic impacts of small business employment, and combing small business employment with small business ownership on economic growth in Mississippi and Louisiana counties. A positive effect of small business employment factors on economic growth shows that pro- economic development small business policies are associated with an improvement in the economic well-being of Mississippi and Louisiana communities. This result would suggest that policies tailored to promote small business formation, which provide jobs to local communities have been beneficial to these communities. On the other hand, a negative impact would suggest changes in the policies tailored in enhancing small business formation as these may not be benefiting the poor by providing jobs. The findings of this study will provide much needed input to policy makers and community leaders from an economic perspective which may help them make timely adjustments to their current policies to achieve the desired economic development objectives.