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The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment

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  • Giuseppe Moscarini
  • Fabien Postel-Vinay

Abstract

We document a negative correlation, at business cycle frequencies, between the net job creation rate of large employers and the level of aggregate unemployment that is much stronger than for small employers. The differential growth rate of employment between initially large and small employers has an unconditional correlation of -0.5 with the unemployment rate, and varies by about 5 percent over the business cycle. We exploit several datasets from the United States, Denmark, and France, both repeated cross sections and job flows with employer longitudinal information, spanning the last four decades and several business cycles. We discuss implications for theories of factor demand. (JEL D22, E23, E32, J23, L25)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 6 (October)
Pages: 2509-39

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:6:p:2509-39

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Cited by:
  1. Peter A. Diamond, 2013. "Cyclical Unemployment, Structural Unemployment," CESifo Working Paper Series 4130, CESifo Group Munich.
  2. Chiara Criscuolo & Peter N. Gal & Carlo Menon, 2014. "The Dynamics of Employment Growth: New Evidence from 18 Countries," OECD Science, Technology and Industry Policy Papers 14, OECD Publishing.
  3. Ronald Bachmann & Mathias Sinning, 2012. "Decomposing the Ins and Outs of Cyclical Unemployment," ANU Working Papers in Economics and Econometrics 2012-571, Australian National University, College of Business and Economics, School of Economics.
  4. Gal, Peter N. & Hijzen, Alexander & Wolf, Zoltan, 2013. "The Role of Institutions and Firm Heterogeneity for Labour Market Adjustment: Cross-Country Firm-Level Evidence," IZA Discussion Papers 7404, Institute for the Study of Labor (IZA).
  5. Abo-Zaid, Salem, 2014. "Revisions to US labor market data and the public’s perception of the economy," Economics Letters, Elsevier, vol. 122(2), pages 119-124.
  6. Henrekson, Magnus & Sanandaji, Tino, 2013. "Small Business Activity Does not Measure Entrepreneurship," Working Paper Series 959, Research Institute of Industrial Economics, revised 26 Jan 2014.
  7. David Berger, 2012. "Countercyclical Restructuring and Jobless Recoveries," 2012 Meeting Papers 1179, Society for Economic Dynamics.
  8. Erzo G.J. Luttmer, 2012. "Slow convergence in economies with firm heterogeneity," Working Papers 696, Federal Reserve Bank of Minneapolis.
  9. Daniel Kopasker & Holger Görg & Hassan Molana & Catia Montagna, 2013. "Negative Shocks, Job Creation, and Selection," WWWforEurope Working Papers series 11, WWWforEurope.
  10. Manuel Adelino & Song Ma & David T. Robinson, 2014. "Firm Age, Investment Opportunities, and Job Creation," NBER Working Papers 19845, National Bureau of Economic Research, Inc.

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