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Establishment exits in Germany: The role of size and age

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  • Fackler, Daniel
  • Schnabel, Claus
  • Wagner, Joachim

Abstract

Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various 'liabilities' of establishment survival identified in the literature, we analyze the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than five years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15 to 18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways. -- Mit umfangreichen Daten für Westdeutschland untersucht diese Studie die Einflussfaktoren von Betriebsschließungen. Es zeigt sich, dass die durchschnittliche Schließungsrate der Betriebe von 1975 bis 2006 deutlich gestiegen ist. Um verschiedene in der Literatur herausgearbeitete Anfälligkeiten zu überprüfen, analysieren wir den Einfluss der Betriebsgröße sowie Unterschiede zwischen jungen und älteren Betrieben. Die empirische Analyse zeigt, dass das Sterberisiko mit der Betriebsgröße abnimmt, was die 'liability of smallness' bestätigt. Entsprechend der 'liability of newness' ist die Schließungswahrscheinlichkeit deutlich höher für jüngere Betriebe, die maximal fünf Jahre alt sind. Ferner findet sich eine 'liability of aging', da die Schließungswahrscheinlichkeit zunächst mit dem Alter abnimmt, ihr Minimum zwischen 15 und 18 Jahren erreicht und danach wieder etwas zunimmt. Die Einflussfaktoren der Betriebsschließungen unterscheiden sich deutlich zwischen jungen und älteren Betrieben, wobei junge Betriebe in verschiedener Weise gefährdeter sind.

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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 76.

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Date of creation: 2012
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Handle: RePEc:zbw:faulre:76

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Web page: http://www.arbeitsmarkt.wiso.uni-erlangen.de/english-version/
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Keywords: firm exits; Germany;

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Cited by:
  1. Fackler, Daniel & Schnabel, Claus, 2013. "Survival of spinoffs and other startups: First evidence for the private sector in Germany, 1976 - 2008," IWQW Discussion Paper Series 06/2013, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  2. Fackler, Daniel, 2014. "Establishment survival in East and West Germany: A comparative analysis," Discussion Papers 90, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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