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Job Flows and Establishment Characteristics: Variations Across U.S. Metropolitan Areas

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  • R. Jason Faberman

Abstract

This paper addresses the role played within metropolitan areas by heterogeneous agent models of constant churning. The evidence shows positive relationships between job turnover, young establishments, and metropolitan employment growth. Most areas, however, differ in their levels of job creation rather than job destruction. Results persist after controlling for regional differences in industry, but less so when controlling for differences in the establishment age distribution, and are consistent overall with standard models of creative destruction. Evidence from several entering cohorts, however, contradicts the vintage replacement process of creative destruction models. Namely, job destruction decreases as establishments age and there is no clear inverse relation between establishment entry rates and exit ages. These patterns are instead consistent with a turnover process seen in standard models of firm learning. Further evidence suggests that these patterns vary systematically with the overall employment growth of a region. Together, the results suggest that (i) processes of both creative destruction and firm learning may matter for local labor dynamics, but future models will have to reconcile with this new evidence, and (ii) intrinsic local factors, such as the “business climate”, may affect the dynamics of both processes.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2003-609.

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Length: 43 pages
Date of creation: 01 Sep 2003
Date of revision:
Handle: RePEc:wdi:papers:2003-609

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Keywords: job turnover; regional and urban growth; creative destruction; firm learning;

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References

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Citations

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Cited by:
  1. Huber, Peter & Oberhofer, Harald & Pfaffermayr , Michael, 2013. "Who Creates Jobs? Estimating Job Creation Rates at the Firm Level," Working Papers in Economics and Finance, University of Salzburg 2013-5, University of Salzburg.
  2. Min Ouyang, 2005. "The Scarring Effect of Recessions," Working Papers 050609, University of California-Irvine, Department of Economics.
  3. Fernando Alvarez & Robert Shimer, 2008. "Search and Rest Unemployment," NBER Working Papers 13772, National Bureau of Economic Research, Inc.
  4. John Francis, 2007. "Asymmetries in regional labor markets, migration and economic geography," The Annals of Regional Science, Springer, Springer, vol. 41(1), pages 125-143, March.

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