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Accounting for Job Growth: Disentangling Size and Age Effects in an International Cohort Comparison

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Author Info

  • Anyadike-Danes, Michael

    (Aston Business School and Enterprise Research Centre, UK)

  • Bjuggren, Carl Magnus

    ()
    (Research Institute of Industrial Economics (IFN))

  • Gottschalk, Sandra

    (ZEW, Germany)

  • Hölzl, Werner

    (WIFO, Austria)

  • Johansson, Dan

    ()
    (HUI Research)

  • Maliranta, Mika

    (ETLA)

  • Myrann, Anja

    (Ragnar Frisch Centre for Economic Research, Norway)

Abstract

The contribution of different-sized businesses to job creation continues to attract policymakers’ attention, however, it has recently been recognized that conclusions about size were confounded with the effect of age. We probe the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life, using variation across half a dozen northern European countries Austria, Finland, Germany, Norway, Sweden, and the UK to pin down size effects. We find that a very small proportion of the smallest firms play a crucial role in accounting for cross-country differences in job growth. A closer analysis reveals that the initial size distribution and survival rates do not seem to explain job growth differences between countries, rather it is a small number of rapidly growing firms that are driving this result.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 1019.

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Length: 38 pages
Date of creation: 24 Apr 2014
Date of revision:
Handle: RePEc:hhs:iuiwop:1019

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Keywords: Birth cohort; Firm age; Firm size; Firm survival; Firm growth;

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  1. John Haltiwanger, 2012. "Job Creation and Firm Dynamics in the United States," Innovation Policy and the Economy, University of Chicago Press, vol. 12(1), pages 17 - 38.
  2. John Haltiwanger & Stefano Scarpetta & Helena Schweiger, 2008. "Assessing Job Flows Across Countries: The Role of Industry, Firm Size and Regulations," NBER Working Papers 13920, National Bureau of Economic Research, Inc.
  3. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  4. Bassanini, Andrea & Marianna, Pascal, 2009. "Looking Inside the Perpetual-Motion Machine: Job and Worker Flows in OECD Countries," IZA Discussion Papers 4452, Institute for the Study of Labor (IZA).
  5. Cabral, Luís M B & Mata, José, 2001. "On the Evolution of the Firm Size Distribution: Facts and Theory," CEPR Discussion Papers 3045, C.E.P.R. Discussion Papers.
  6. John Haltiwanger & Stefano Scarpetta & Helena Schweiger, 2010. "Cross country differences in job reallocation: the role of industry, firm size and regulations," Working Papers 116, European Bank for Reconstruction and Development, Office of the Chief Economist.
  7. Bartelsman, Eric & Haltiwanger, John C. & Scarpetta, Stefano, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," IZA Discussion Papers 1374, Institute for the Study of Labor (IZA).
  8. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 53-82, January.
  9. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2003. "Comparative Analysis of Firm Demographics and Survival: Micro-Level Evidence for the OECD Countries," OECD Economics Department Working Papers 348, OECD Publishing.
  10. Steven Vale, 2006. "The International comparability of Business Start-up Rates Final Report," OECD Statistics Working Papers 2006/4, OECD Publishing.
  11. Neumark, David & Wall, Brandon & Zhang, Junfu, 2008. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," IZA Discussion Papers 3888, Institute for the Study of Labor (IZA).
  12. repec:dgr:uvatin:2004114 is not listed on IDEAS
  13. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  14. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2009. "Measuring and Analyzing Cross-country Differences in Firm Dynamics," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 15-76 National Bureau of Economic Research, Inc.
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