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Lingering illness or sudden death? Pre-exit employment developments in German establishments

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

Abstract

Using a large administrative dataset for Germany, this paper compares employment developments in exiting and surviving establishments. For both West and East Germany we find a clear 'shadow of death' effect reflecting lingering illness: establishments shrink dramatically already several years before closure, employment growth rates differ strongly between exiting and surviving establishments, and this difference becomes stronger as exit approaches. We further show that prior to exit the workforce becomes on average more skilled, more female and older in exiting compared to surviving establishments. These effects are more clearly visible in West than in East Germany. Our results also hold when applying a matching approach. -- Anhand umfangreicher administrativer Daten für Deutschland vergleicht diese Studie Beschäftigungsentwicklungen in sterbenden und überlebenden Betrieben. Die Ergebnisse bestätigen sowohl für West- als auch Ostdeutschland die Existenz eines sogenannten 'shadow of death'-Effekts: bereits mehrere Jahre vor der Schließung weisen sterbende Betriebe deutliche Beschäftigungsrückgänge auf und es gibt signifikante Unterschiede in den Beschäftigungswachstumsraten sterbender und überlebender Betriebe, die mit dem Herannahen der Schließung zunehmen. Weiterhin zeigt sich, dass das durchschnittliche Qualifikationsniveau, der Frauenanteil sowie das Median-Alter der Belegschaft in schließenden Betrieben im Vergleich zu überlebenden (stärker) ansteigen. Diese Effekte sind für Westdeutschland deutlicher ausgeprägt als für Ostdeutschland. Die Robustheit der Ergebnisse wird anhand eines Matching-Ansatzes bestätigt.

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Paper provided by Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics in its series Discussion Papers with number 82.

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Date of creation: 2012
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Handle: RePEc:zbw:faulre:82

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Web page: http://www.arbeitsmarkt.wiso.uni-erlangen.de/english-version/
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Keywords: Firm exits; shadow of death; Germany;

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  1. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  2. J. Bradford Jensen & Andrew Bernard, 2005. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," Working Papers 05-18, Center for Economic Studies, U.S. Census Bureau.
  3. Kozo Kiyota & Miho Takizawa, 2006. "The Shadow of Death: Pre-exit Performance of Firms in Japan," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 06033, Research Institute of Economy, Trade and Industry (RIETI).
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  13. Paul A. Lengermann & Lars Vilhuber, 2002. "Abandoning the Sinking Ship: The Composition of Worker Flows Prior to Displacement," Longitudinal Employer-Household Dynamics Technical Papers, Center for Economic Studies, U.S. Census Bureau 2002-11, Center for Economic Studies, U.S. Census Bureau.
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  16. Marcus Box, 2008. "The death of firms: exploring the effects of environment and birth cohort on firm survival in Sweden," Small Business Economics, Springer, Springer, vol. 31(4), pages 379-393, December.
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