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Job Creation and Destruction over the Business Cycles and the Impact on Individual Job Flows in Denmark 1980-2001

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Author Info

  • Ibsen, Rikke

    ()
    (Department of Economics, Aarhus School of Business)

  • Westergaard-Nielsen, Niels

    ()
    (Department of Economics, Aarhus School of Business)

Abstract

Job creation and destruction should be considered as key success or failure criteria of the economic policy. Job creation and destruction are both effects of economic policy, the degree of out- and in-sourcing, and the ability to create new ideas that can be transformed into jobs. Job creation and destruction are results of businesses attempting to maximize their economic outcome. One of the costs of this process is that employees have to move from destroyed jobs to created jobs. The development of this process probably depends on labor protection laws, habits, the educational system, and the whole UI-system. A flexible labor market ensures that scarce labor resources are used where they are most in demand. Thus, labor turnover is an essential factor in a well-functioning economy. This paper uses employer-employee data from the Danish registers of persons and workplaces to show where jobs have been destroyed and where they have been created over the last couple of business cycles. Jobs are in general destroyed and created simultaneously within each industry, but at the same time a major restructuring has taken place, so that jobs have been lost in Textile and Clothing, Manufacturing and the other “old industries”, while jobs have been created in Trade and Service industries. Out-sourcing has been one of the causes. This restructuring has caused a tremendous pressure on workers and their ability to find employment in expanding sectors. The paper shows how this has been accomplished. Especially, the paper shows what has happened to employees involved. Have they become unemployed, employed in the welfare sector or where?

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Bibliographic Info

Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 05-4.

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Length: 43 pages
Date of creation: 02 Sep 2005
Date of revision:
Handle: RePEc:hhs:aareco:2005_004

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx
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Keywords: job creation and job destruction; turnover of personnel; duration of unemployment; and impact of business cycles;

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References

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  1. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-24, September.
  2. Ann P. Bartel, 1982. "Wages, nonwage job characteristics, and labor mobility," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(4), pages 578-589, July.
  3. Trostel, P. & Walker, I., 2000. "Education and Work," The Warwick Economics Research Paper Series (TWERPS) 554, University of Warwick, Department of Economics.
  4. Robert Gibbons & Lawrence Katz, 1989. "Layoffs and Lemons," NBER Working Papers 2968, National Bureau of Economic Research, Inc.
  5. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
  6. Kristensen, Nicolai & Westergård-Nielsen, Niels C., 2004. "Does Low Job Satisfaction Lead to Job Mobility?," IZA Discussion Papers 1026, Institute for the Study of Labor (IZA).
  7. McLaughlin, Kenneth J, 1991. "A Theory of Quits and Layoffs with Efficient Turnover," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 1-29, February.
  8. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
  9. Frederiksen, Anders & Westergaard-Nielsen, Niels, 2002. "Where did they go ?," CLS Working Papers 01-11, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
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Cited by:
  1. Peter Huber & Harald Oberhofer & Michael Pfaffermayr, 2012. "Who Creates Jobs? Estimating Job Creation Rates at the Firm Level," WIFO Working Papers 435, WIFO.
  2. O'Farrell, Rory, 2012. "The effect of international firm mobility on wages and unemployment," Labour Economics, Elsevier, vol. 19(6), pages 931-943.

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