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The Dynamics of Job Creation and Job Destruction: Is Sub-Saharan Africa Different?

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  • Admasu Shiferaw

    (University of Göttingen)

  • Arjun Bedi

    (International Institute of Social Studies, Erasmus University Rotterdam)

Abstract

This paper analyzes the creation, destruction and reallocation of jobs to better understand the micro-dynamics of aggregate employment change in African manufacturing. The nature and magnitude of gross job flows are examined using a unique panel data of Ethiopian manufacturing establishments over the period 1996-2007. We also assess the relative importance of firm demographics, industry effects and business cycles for job flows. The rates and patterns of job creation and destruction in our sample are comparable to the findings from developed and emerging economies suggesting that African firms adjust their labor force in a manner broadly similar to firms elsewhere and that African labor markets are not uniquely restrictive to undermine job reallocation across firms. We also find, like in many other countries, that job reallocation is relatively higher in industries dominated by small and young establishments. Unlike in other regions, however, job reallocation in our sample is pro-cyclical and its cross-industry variation holds very little similarity with that of developed and emerging economies. Small firms in Africa create jobs mainly at the point of entry to a market with limited contribution to manufacturing employment through post-entry expansion.

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Bibliographic Info

Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 22.

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Date of creation: 11 Jan 2010
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Handle: RePEc:got:gotcrc:022

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Keywords: Job Creation; Job Destruction; Job Reallocation; Firm Dynamics; Sub-Saharan Africa; Ethiopia;

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References

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  1. Steven J. Davis & John Haltiwanger, 1990. "Gross Job Creation and Destruction: Microeconomic Evidence and Macroeconomic Implications," NBER Chapters, National Bureau of Economic Research, Inc, in: NBER Macroeconomics Annual 1990, Volume 5, pages 123-186 National Bureau of Economic Research, Inc.
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Cited by:
  1. Klapper, Leora & Richmond, Christine, 2011. "Patterns of business creation, survival and growth: Evidence from Africa," Labour Economics, Elsevier, Elsevier, vol. 18(S1), pages S32-S44.
  2. repec:ldr:wpaper:92 is not listed on IDEAS
  3. Szirmai, Adam & Gebreeyesus, Mulu & Guadagno, Francesca & Verspagen, Bart, 2013. "Promoting productive employment in Sub-Saharan Africa: A review of the literature," MERIT Working Papers, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) 062, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  4. Andrew Kerr & Martin Wittenberg & Jairo Arrow, 2013. "Job Creation and Destruction in South Africa," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 092, Southern Africa Labour and Development Research Unit, University of Cape Town.
  5. Jan de Kok & Sophie Doove & Peter Oeij & Karolus Kraan, 2014. "Scale effects in workplace innovations," Scales Research Reports, EIM Business and Policy Research H201402, EIM Business and Policy Research.

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