Employment generation process is dependent on the predictive capability and development in small and medium enterprises in India; but no model is perfectly able to capture the employment structures. Small and medium enterprises is one of the sensitive area has attracted less research attention compared to other area in economy. This paper examines the movements of employment generations due to the contribution of small and medium enterprises. A applications of T-Test, F-Test, Chi-Square Test, ANOVAS and critical evaluation models applied for testing hypothesis and obtaining results. The impulse response validates the results obtained. Hence dynamic relationship among employment generation and small and medium enterprises does exist. However, a small and medium enterprise shows persistence role in employment generation.