(FORTUNE Magazine) – Across the nation, scrappy small businesses heroically create jobs while FORTUNE 500 dinosaurs pare payrolls. Or so any pep-talking pol pushing a tax or health care break for ''the little guy'' will tell you. The sentiment is heartwarming but based on quicksand. University of Maryland economist John Haltiwanger says many in his profession have long had misgivings about the numbers behind small business's job-creating prowess, suspecting inaccurate data and faulty methodology. His recent work with Steven J. Davis of the University of Chicago and the Federal Reserve Board's Scott Schuh demonstrates how statistical errors enhance small business's mystique. One fallacy results from the movement of companies in and out of size categories set by the Small Business Administration. (The SBA's official cutoff for ''small business'' in manufacturing is 500 employees.) Reclassification can create phony statistics. When a ''large'' 501-person outfit fires two people, it becomes a ''small'' business that has just ''created'' 499 jobs. Wary of such statistical illusions, Haltiwanger looked at the payrolls of manufacturers between 1973 and 1988. He found little relationship between net job-creation rates and company size. If anything, the larger corporations slightly outperformed the smaller ones. And on the issue of job security, big companies were the clear winners (see chart). Though recent layoffs among the largest companies may trim their advantage, Haltiwanger believes they still come out comfortably ahead of the smallest employers.

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: STEVEN J. DAVIS/JOHN HALTIWANGER/SCOTT SCHUH CAPTION: HOW LONG JOBS LAST