Abstract
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This paper examines the relative importance of small and large firms in the business sectors of Canada and the United States from 2002 to 2008.
Estimates of the contribution of small and large firms to Canadian gross domestic product (GDP) are presented. In this paper, small firms are defined as those with fewer than 500 employees and large firms as those with 500 or more employees.
The study found that the relative importance of small firms in terms of GDP and hours worked is larger in Canada than in the U.S—and that it is substantially greater when labour input, as opposed to gross domestic product (GDP) produced, is used for the analysis. In 2008, small firms in Canada generated 53.4% of business-sector GDP compared to 46.1% in the United States. The relative share of hours worked in the business sector was 70.8% in Canada compared to 55.6% in the United States. This implies that the relative productivity of small firms vis-à-vis large firms is lower in Canada than in the United States.
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