Notes

^1.

Papers that present evidence consistent with these theories include Ács and Audretsch (1990) and Audretsch, Prince and Thurik (1999).

^2.

For example, Beck, Demirgüç-Kunt and Levine (2003) present cross-country evidence on the relationship between the share of employment in manufacturing accounted for by small and medium-sized businesses and various economic indicators, such as per capita GDP growth, the level and growth rate of GDP per capita of the lowest income quintile, and the share of population living below the poverty line.

^3.

Understanding the link between these shares and the dynamism and efficiency of the aggregate economy is left to future research.

^4.

In this paper, GDP is measured at basic prices.

^5.

The Input-Output Accounts are on an establishment basis. This paper works at the level of the ultimate parent.

^6.

The legal structure headed by each ultimate parent in Canada for 2005 was obtained from Statistics Canada's Business Register (Generic Survey Universe File [G-SUF]).

^7.

Company is the level at which operating profit can be measured. Establishment is the level at which the accounting data required to measure production is available (principal inputs, revenues, salaries and wages).

^8.

In contrast, the Business Register determines the industry of a complex business by examining where the business generated the most value added. Value added, however, is not directly observed in the Business Register. It is estimated by applying industry-specific ratios of value added to revenues from the System of National Accounts to revenues in the Business Register. The way in which an enterprise is assigned to an industry is one of the areas where sensitivity analysis could be performed in the future.

^9.

See Canadian Industry Statistics http://www.ic.gc.ca/epic/site/cis-sic.nsf/en/h_00005e.html.

^10.

The franchisor is the company that owns and controls the franchise system and grants the license to operate the franchise according to a certain method, and with the products and/or services that have been developed by the franchisor. The franchisee pays a franchisor for the franchise and a right to use the franchise system.

^11.

The official estimates for the business sector in the Input-Output Accounts include owner-occupied dwellings. For simplicity, the owner-occupied dwellings industry was moved from the business sector to the non-business sector for this analysis because the imputed rent of owner-occupied housing is attributed to households, the owners of the housing capital, not firms.

^12.

The estimates were benchmarked to Rispoli (2009a,b,c) who generated value added by component for unincorporated enterprises and corporations. These, in turn, were benchmarked to the Input-Output Accounts.

^13.

The advantage of using tax data over establishment-based surveys is that they provide a complete picture of the enterprise. The establishment- (or location-) based surveys that have generally been used to build the Input-Output Accounts collect data on establishments for a particular industry. They cannot provide a picture of the other establishments with the enterprise that operate in other industries. On the other hand, the T4, GIFI and payroll tax data can be readily aggregated to the level of the ultimate parent.

^14.

The employment insurance paid by employers is assumed to be 1.4 times the contribution of employees.

^15.

SNA profits are based on operating profits rather than total profits to include only profits earned during production.

^16.

Y. Decady (Statistics Canada 2008) shows that in 2005, 99.8% of workplaces with 500 or more employees offered non-wage benefits, compared to 40.2% for workplaces with 1 to 19 employees.

^17.

For example, it is an open question whether commercial property taxes, a large fraction of indirect taxes on production, are borne by the property owner or by the consumers of the product made by commercial capital. See Man (1995) and Mieszkowski (1972) for more details.