Why Small Businesses Were Hit Harder by the Recent Recession
7 Pages Posted: 27 Jul 2011
Date Written: July 1, 2011
Although both large and small businesses felt the sting of job losses during the 2007-09 downturn, small firms experienced disproportionate declines. A study of the recession’s employment effect on small firms suggests that poor sales and economic uncertainty were the main reasons for their weak performance and sluggish recovery - problems that affected large firms too, but to a lesser degree. Although a tightened credit supply constrained some small firms, weak consumer demand for the firms’ products and services was a more pressing factor, reducing revenues and dampening new investment spending.
Keywords: Small businesses, Great recession of 2007, Employment
JEL Classification: E24,J21
Suggested Citation: Suggested Citation