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Job Flows and Plant Size Dynamics: Traditional Measures and Alternative Econometric Techniques

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  • Pietro Garibaldi

Abstract

This paper measures the relation between job flows and establishment size, applying econometric techniques best suited for analyzing the long-run dynamics of large cross-section. Using a balanced panel from the Mexican manufacturing sector, it shows that, in line with existing evidence, initially small firms create proportionally more jobs than large firms. Since these results suffer from regression toward the mean, the paper applies an alternative technique and does not find any long-run tendency of small establishments converging toward the mean. Furthermore, it shows how cross-sectional dynamics across industries varies, and how it is linked to gross and net flows in each sector. Convergence to the mean is observed in relatively stable industries, with asymmetric dynamic behavior between expanding and declining industries. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 2000.

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Bibliographic Info

Article provided by CEIS in its journal Labour.

Volume (Year): 14 (2000)
Issue (Month): 2 (06)
Pages: 185-212

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Handle: RePEc:bla:labour:v:14:y:2000:i:2:p:185-212

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  1. Danny Quah, 1992. "Empirical cross-section dynamics in economic growth," Discussion Paper / Institute for Empirical Macroeconomics 75, Federal Reserve Bank of Minneapolis.
  2. Geweke, John & Marshall, Robert C & Zarkin, Gary A, 1986. "Mobility Indices in Continuous Time Markov Chains," Econometrica, Econometric Society, vol. 54(6), pages 1407-23, November.
  3. R Koopmans & A Lamo, 1995. "Cross-Sectional Firm Dynamics: Theory and Empirical Results from the Chemical Sector," CEP Discussion Papers dp0229, Centre for Economic Performance, LSE.
  4. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
  5. Steven J. Davis & John Haltiwanger, 1990. "Gross Job Creation and Destruction: Microeconomic Evidence and Macroeconomic Implications," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 123-186 National Bureau of Economic Research, Inc.
  6. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-74, August.
  7. Quah, Danny, 1994. "Convergence Empirics Across Economies with (Some) Capital Mobility," CEPR Discussion Papers 954, C.E.P.R. Discussion Papers.
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Cited by:
  1. Martin-Barroso, David & Nuñez-Serrano, Juan Andres & Turrion, Jaime & Velazquez, Francisco J., 2011. "The European Map of Job Flows," MPRA Paper 33602, University Library of Munich, Germany, revised 2011.

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