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Job creation and job destruction in a regulated labor market: The case of Austria

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Author Info
Alfred M Stiglbauer (Austrian National Bank, Vienna)
Florian Stahl (University of Zurich, Switzerland)
Rudolf Winter-Ebmer () (Department of Economics, Johannes Kepler University Linz, Austria)
Josef Zweimüller (University of Zurich, Switzerland)

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Abstract

We study Austrian job reallocation in the period of 1978 to 1998, using a large administrative dataset where we correct for "spurious" entries and exits of firms. We find that on average 9 out of 100 randomly selected jobs were created within the last year, and that about 9 out of randomly selected 100 jobs will be destroyed within the next year. Hence, Austrian job flows seem to be of comparable magnitude as in other countries, similar to the well-known results of Davis et al. (1996) for the United States. Job reallocation appears to be driven primarily by idiosyncratic shocks. However, job creation increases significantly during cyclical upswings whereas job destruction rises in downturns. We also find substantial persistence of job creation and destruction. We show that the pronounced pattern of job reallocation rates falling with firm size and age continues to hold when we use a set of controls. Finally, we show that - controlling for sector and for firm size composition - Austrian job reallocation rates are only half the rates for the U. S. This result is not surprising given the impact of tighter regulation and labor law in Austria.

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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2002-05.

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Date of creation: Jul 2002
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Handle: RePEc:jku:econwp:2002_05

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Keywords: Labor reallocation job flows labor market regulation

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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  1. Hofer, Helmut & Pichelmann, Karl & Schuh, Andreas-Ulrich, 2001. "Price and Quantity Adjustments in the Austrian Labour Market," Applied Economics, Taylor and Francis Journals, vol. 33(5), pages 581-92, April. [Downloadable!] (restricted)
  2. Burgess, Simon & Lane, Julia & Stevens, David, 2000. "Job Flows, Worker Flows, and Churning," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 473-502, July. [Downloadable!] (restricted)
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  3. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May. [Downloadable!] (restricted)
  4. Margolis, D.N., 2000. "Worker Displacement in France," Papers 2000-01, Institut National de la Statistique et des Etudes Economiques-.
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  5. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier. [Downloadable!] (restricted)
  6. Caballero, Ricardo J & Hammour, Mohamad L, 1994. "The Cleansing Effect of Recessions," American Economic Review, American Economic Association, vol. 84(5), pages 1350-68, December. [Downloadable!] (restricted)
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  1. Emilia Del Bono & Andrea Weber, 2006. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," IZA Discussion Papers 2242, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Jurajda, Stepán & Terrell, Katherine, 2002. "Job Growth in Early Transition: Comparing Two Paths," IZA Discussion Papers 589, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Friedrich Schneider & Kausik Chaudhuri & Sumana Chatterjee, 2003. "The Size and Development of the Indian Shadow Economy and a Comparison with other 18 Asian Countries: An Empirical Investigation," Economics working papers 2003-02, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
  4. Friedrich Schneider & Alexander F. Wagner, 2003. "Tradeable permits - Ten key design issues," Economics working papers 2003-04, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
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  6. René Böheim & Alfred Stiglbauer & Rudolf Winter-Ebmer, 2005. "When and How to Create a Job: The Survival of New Jobs in Austrian Firms," IZA Discussion Papers 1602, Institute for the Study of Labor (IZA). [Downloadable!]
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  7. Friedrich Schneider & Alexander F. Wagner & Mathias Dufour, 2003. "Satisfaction not guaranteed-Institutions and satisfaction with democracy in Western Europe," Economics working papers 2003-03, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
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  8. Elena Cefis & Roberto Gabriele, 2005. "Does Spatial Disaggregation Matter in Job Creation and Destruction Flows?," Working Papers 05-21, Utrecht School of Economics. [Downloadable!]
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  9. Haas, Anette & Rothe, Thomas, 2005. "Labour market dynamics from a regional perspective : the multi-account system," IAB Discussion Paper 200507, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
  10. Michael Pfaffermayr & Peter Egger & Andrea Weber, 2007. "Sectoral adjustment of employment to shifts in outsourcing and trade: evidence from a dynamic fixed effects multinomial logit model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 559-580. [Downloadable!]
  11. David Card & Raj Chetty & Andrea Weber, 2006. "Cash-on-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market," NBER Working Papers 12639, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Andrea Weber & Helmut Mahringer, 2006. "Choice and Success of Job Search Methods," IZA Discussion Papers 1939, Institute for the Study of Labor (IZA). [Downloadable!]
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  13. René Böheim & Alfred Stiglbauer & Rudolf Winter-Ebmer, 2008. "On the Persistence of Job Creation in Old and New Firms," Economics working papers 2008-04, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
  14. Julián Messina & Giovanna Vallanti, 2006. "Job Flow Dynamics and Firing Restrictions: Evidence from Europe," IZA Discussion Papers 2045, Institute for the Study of Labor (IZA). [Downloadable!]
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