UCI News

Cities can't bank on small businesses for stability, study reports

Locally owned small businesses don't insulate communities from layoffs and closures in bad economic times. Rather, corporate headquarters do the…

October 23, 2009

Locally owned small businesses don’t insulate communities from layoffs and closures in bad economic times. Rather, corporate headquarters do the most to protect cities from employment reductions, reports a new study co-authored by a UC Irvine economist. This debunks a popular argument that owners of “mom and pop” stores are less likely to lay off employees, relocate or close their businesses when the economy sours, says David Neumark, UCI economics professor and a Bren Fellow at the Public Policy Institute of California. The findings validate the efforts of many local governments to attract and retain corporate headquarters, he says.