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How fast do newly founded firms mature? : empirical analyses on job quality in start-ups

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Author Info

  • Brixy, Udo

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Kohaut, Susanne

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Schnabel, Claus

Abstract

"Using a linked employer-employee data set for Germany, this paper analyzes labour fluctuation and wage setting in a cohort of newly founded and other establishments from 1997 to 2001. We show empirically that start-ups tend to have higher labour turnover rates, ceteris paribus. Moreover, bargaining coverage rates and wages in new firms are lower than in similar incumbent firms. Both the excess labour fluctuation and the wage differential are shown to decline and become insignificant over time as the newly founded firms mature. Our results imply that it takes a new firm only a few years to become an incumbent firm." (Author's abstract, IAB-Doku) ((en))

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Bibliographic Info

Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200502.

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Length: 22 pages
Date of creation: 13 Jan 2005
Date of revision:
Publication status: published in: Michael Fritsch, Jürgen Schmude (Ed.): Entrepreneurship in the region, New York et al., 2006, p. 95-112
Handle: RePEc:iab:iabdpa:200502

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Keywords: Unternehmensgründung; Unternehmensentwicklung;

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References

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  1. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November.
  2. Kölling, Arnd & Schnabel, Claus & Wagner, Joachim, 2002. "Establishment Age and Wages: Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 679, Institute for the Study of Labor (IZA).
  3. Matthew Barnes & Jonathan Haskel, 2002. "Job Creation, Job Destruction and the Contribution of Small Businesses: Evidence for UK Manufacturing," Working Papers 461, Queen Mary, University of London, School of Economics and Finance.
  4. Brixy, Udo & Kohaut, Susanne, 1999. " Employment Growth Determinants in New Firms in Eastern Germany," Small Business Economics, Springer, vol. 13(2), pages 155-70, September.
  5. Charles Brown & James L. Medoff, 2003. "Firm Age and Wages," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 677-698, July.
  6. Audretsch, David B. & van Leeuwen, George & Menkveld, Bert & Thurik, Roy, 2001. "Market dynamics in the Netherlands: Competition policy and the role of small firms," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 795-821, April.
  7. 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.
  8. Brixy, Udo & Kohaut, Susanne & Schnabel, Claus, 2004. "Do newly founded firms pay lower wages? : first evidence from Germany," IAB Discussion Paper 200404, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  9. Michael Fritsch & Antje Weyh, 2006. "How Large are the Direct Employment Effects of New Businesses? An Empirical Investigation for West Germany," Small Business Economics, Springer, vol. 27(2), pages 245-260, October.
  10. Addison, John T & Schnabel, Claus & Wagner, Joachim, 2001. "Work Councils in Germany: Their Effects on Establishment Performance," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 659-94, October.
  11. Fritsch, Michael & Weyh, Antje, 2004. "How large are the direct employment effects of new businesses? An empirical investigation," Freiberg Working Papers 2004,05, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  12. Wagner, Joachim, 1994. "The Post-entry Performance of New Small Firms in German Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 141-54, June.
  13. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
  14. Grotz, Reinhold & Brixy, Udo, 2002. "Entry-rates, the share of surviving businesses and employment growth: differences between West and East Germany since unification," ERSA conference papers ersa02p175, European Regional Science Association.
  15. Susanne Kohaut & Claus Schnabel, 2003. "Tarifverträge - nein danke!?, Ausmaß und Einflussfaktoren der Tarifbindung west- und ostdeutscher Betriebe," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 223(3), pages 312-331, May.
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Citations

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Cited by:
  1. Fackler, Daniel & Schnabel, Claus & Wagner, Joachim, 2012. "Establishment Exits in Germany: The Role of Size and Age," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62025, Verein für Socialpolitik / German Economic Association.
  2. Heckmann, Markus & Schnabel, Claus, 2005. "Überleben und Beschäftigungsentwicklung neu gegründeter Betriebe," Discussion Papers 39, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  3. Claus Schnabel & Susanne Kohaut & Udo Brixy, 2011. "Employment stability in newly founded firms: a matching approach using linked employer–employee data from Germany," Small Business Economics, Springer, vol. 36(1), pages 85-100, January.
  4. Hirsch, Boris, 2007. "Joan Robinson Meets Harold Hotelling : A Dyopsonistic Explanation of the Gender Pay Gap," Discussion Papers 51, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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