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Establishment exits in Germany: the role of size and age

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  • Daniel Fackler

    ()

  • Claus Schnabel

    ()

  • Joachim Wagner

    ()

Abstract

Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various “liabilities” of establishment survival identified in the literature, we analyzed the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than 5 years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15–18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways. Copyright Springer Science+Business Media, LLC. 2013

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File URL: http://hdl.handle.net/10.1007/s11187-012-9450-z
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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 41 (2013)
Issue (Month): 3 (October)
Pages: 683-700

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Handle: RePEc:kap:sbusec:v:41:y:2013:i:3:p:683-700

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Web page: http://www.springerlink.com/link.asp?id=100338

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Keywords: Firm exits; Firm size; Firm age; Germany; L26;

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Cited by:
  1. Fackler, Daniel & Schnabel, Claus, 2013. "Survival of spinoffs and other startups: First evidence for the private sector in Germany, 1976-2008," Discussion Papers 84, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  2. Fackler, Daniel, 2014. "Establishment survival in East and West Germany: A comparative analysis," Discussion Papers 90, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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