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

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Author Info

  • Shiferaw, Admasu

    ()
    (The College of William and Mary)

  • Bedi, Arjun S.

    ()
    (ISS, Erasmus University Rotterdam)

Abstract

This paper analyzes the creation, destruction and reallocation of jobs in order to 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 in terms of undermining job reallocation across firms. We also find, as in many other countries, that job reallocation is relatively higher in industries dominated by smaller and younger establishments. However, unlike other regions, job reallocation in our sample is pro-cyclical and its variation across industries bears little similarity to the patterns found in other developed and emerging economies. Small firms in Africa create jobs mainly at the point of market-entry and play a limited role in terms of contributing to manufacturing employment through post-entry expansion.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4623.

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Length: 37 pages
Date of creation: Dec 2009
Date of revision:
Publication status: published as 'The Dynamics of Job Creation and Job Destruction in an African Economy: Evidence from Ethiopia' in: Journal of African Economies, 2013, 22(5), 651-692
Handle: RePEc:iza:izadps:dp4623

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Keywords: Sub-Saharan Africa; job creation; job destruction; job reallocation; firm dynamics; Ethiopia;

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References

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  1. Arne Bigsten & Mulu Gebreeyesus, 2007. "The Small, the Young, and the Productive: Determinants of Manufacturing Firm Growth in Ethiopia," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 813-840.
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Cited by:
  1. repec:ldr:wpaper:92 is not listed on IDEAS
  2. 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.
  3. 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.
  4. Szirmai, Adam & Gebreeyesus, Mulu & Guadagno, Francesca & Verspagen, Bart, 2013. "Promoting productive employment in Sub-Saharan Africa: A review of the literature," MERIT Working Papers 062, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  5. Klapper, Leora & Richmond, Christine, 2011. "Patterns of business creation, survival and growth : evidence from Africa," Policy Research Working Paper Series 5828, The World Bank.

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