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Employment stability of entrants in newly founded firms: a matching approach using linked employer-employee data from Germany

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  • Schnabel, Claus
  • Kohaut, Susanne
  • Brixy, Udo

Abstract

Using a linked employer-employee dataset and taking the perspective of individuals rather than firms, this paper analyzes some effects of joining start-ups. We show that entrants in new firms differ from those joining incumbent firms, and we use a matching approach to compare a group of employees joining new firms in 1995/96 with a control group entering incumbent firms. Our results indicate that individuals' employment stability was higher in incumbent than in newly founded firms while their risk of becoming unemployed was lower. In particular in eastern Germany, joining firms that were older than six years was the best strategy. -- Diese Arbeit analysiert unter Verwendung eines verbundenen Arbeitgeber-Arbeitnehmer-Datensatzes einige Auswirkungen des Eintritts in Neugründungen, wobei die Sicht von Individuen statt von Firmen eingenommen wird. Wir zeigen, dass Personen, die in neue Firmen eintreten, sich von Eintreten-den in bestehende Firmen unterscheiden, und wir verwenden einen Matching-Ansatz, um eine Gruppe von Personen, die 1995/96 in Neugründungen eintrat, mit einer Kontrollgruppe von Eintretenden in bestehende Firmen zu vergleichen. Unsere Ergebnisse deuten darauf hin, dass die Beschäftigungsstabilität der eintre-tenden Personen in bestehenden Firmen höher als in Neugründungen ausfiel, während ihr Risiko arbeitslos zu werden geringer war. Insbesondere in den neuen Bundesländern bestand die beste Strategie darin, in Firmen einzutreten, die älter als sechs Jahre waren.

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Bibliographic Info

Paper provided by Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics in its series Discussion Papers with number 56.

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Date of creation: 2008
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Handle: RePEc:zbw:faulre:56

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Web page: http://www.arbeitsmarkt.wiso.uni-erlangen.de/english-version/
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Keywords: employment; unemployment; newly founded firma; linked employer-employee data; Germany;

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References

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  1. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
  2. Michael Fritsch & Pamela Mueller, 2004. "The Effects of New Business Formation on Regional Development over Time," Papers on Entrepreneurship, Growth and Public Policy 2004-36, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  3. 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.
  4. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 12 Feb 2014.
  5. Michael Fritsch & Pamela Mueller, 2004. "Effects of New Business Formation on Regional Development over Time," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 961-975.
  6. Vicenzo Quadrini & Claudio Michelacci, 2005. "Borrowing From Employees: Wage Dynamics With Financial Constraints," Working Papers wp2005_0501, CEMFI.
  7. 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.
  8. 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.
  9. Schnabel, Claus & Kohaut, Susanne & Brixy, Udo, 2004. "Do newly founded firms pay lower wages? First evidence from Germany," Discussion Papers 28, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  10. Audretsch, David B. & Mata, Jose, 1995. "The post-entry performance of firms: Introduction," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 413-419, December.
  11. 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.
  12. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, December.
  13. 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.
  14. Baldwin, John R. & Rafiquzzaman, Mohammed, 1995. "Selection versus evolutionary adaptation: Learning and post-entry performance," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 501-522, December.
  15. 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.
  16. 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.
  17. Smith, Jeffrey & Todd, Petra, 2005. "Rejoinder," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 365-375.
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Citations

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Cited by:
  1. 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.
  2. Henrekson, Magnus & Johansson, Dan, 2010. "Firm Growth, Institutions and Structural Transformation," Working Paper Series 820, Research Institute of Industrial Economics.
  3. Andreas Koch & Jochen Spaeth, 2009. "New Firms---Different Jobs? An Inquiry into the Quality of Employment in Start-ups and Incumbents," IAW Discussion Papers 50, Institut für Angewandte Wirtschaftsforschung (IAW).

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