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The determinants of job creation and destruction: plant-level evidence for Eastern and Western Germany

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  • Fuchs, Michaela
  • Weyh, Antje

Abstract

We examine job creation and destruction in Eastern and Western Germany for the period of 1999 to 2004, using a large dataset, which enables us to capture clearly entries and exits. There are pronounced differences between the two parts of Germany in terms of magnitude and composition of gross job flows. Considering interaction effects between all variables, weighted regressions show that job creation and destruction can be explained to a large part by plant-specific factors. The pattern found to be pervasive in descriptive studies for other countries that job reallocation rates diminish with firm size and firm age also holds true for Germany. Given that East German plants are smaller and younger than their West German counterparts, this finding largely explains the differences between the East and West German labour dynamics. --

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Bibliographic Info

Paper provided by Dresden University of Technology, Faculty of Business and Economics, Department of Economics in its series Dresden Discussion Paper Series in Economics with number 02/08.

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Date of creation: 2008
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Handle: RePEc:zbw:tuddps:0208

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Postal: 01062 Dresden
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Web page: http://www.tu-dresden.de/wiwi/
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Keywords: Job Creation and Destruction; Job Turnover; Employment Growth; Employment-weighted Regression;

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References

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  1. Olivier Jean Blanchard & Peter Diamond, 1992. "The Flow Approach to Labor Markets," NBER Working Papers 4000, National Bureau of Economic Research, Inc.
  2. Stiglbauer, Alfred M. & Stahl, Florian & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2002. "Job Creation and Job Destruction in a Regulated Labor Market: The Case of Austria," IZA Discussion Papers 546, Institute for the Study of Labor (IZA).
  3. Davis, Steven J & Haltiwanger, John C, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 819-63, August.
  4. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  5. John Baldwin & Timothy Dunne & John Haltiwanger, 1994. "A Comparison of Job Creation and Job Destruction in Canada and the United States," NBER Working Papers 4726, National Bureau of Economic Research, Inc.
  6. P.A. Geroski & José Mata & Pedro Portugal, 2003. "Founding Conditions and the Survival of New Firms," Working Papers, Banco de Portugal, Economics and Research Department w200301, Banco de Portugal, Economics and Research Department.
  7. Gomez-Salvador, Ramon & Messina, Julian & Vallanti, Giovanna, 2004. "Gross job flows and institutions in Europe," Labour Economics, Elsevier, Elsevier, vol. 11(4), pages 469-485, August.
  8. Michael Berlemann & Marcel Thum, 2006. "Mittelfristige Perspektiven der Ost-West-Konvergenz," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 13(01), pages 34-39, 02.
  9. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
  10. Picot, Garnett & Baldwin, John R., 1994. "Employment Generation by Small Producers in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 1994070e, Statistics Canada, Analytical Studies Branch.
  11. Broersma, Lourens & Gautier, Pieter, 1997. " Job Creation and Job Destruction by Small Firms: An Empirical Investigation for the Dutch Manufacturing Sector," Small Business Economics, Springer, Springer, vol. 9(3), pages 211-24, June.
  12. Boeri, Tito & Cramer, Ulrich, 1992. "Employment growth, incumbents and entrants : Evidence from Germany," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 10(4), pages 545-565, December.
  13. Michael Fritsch & Antje Weyh, 2006. "How Large are the Direct Employment Effects of New Businesses? An Empirical Investigation for West Germany," Small Business Economics, Springer, Springer, vol. 27(2), pages 245-260, October.
  14. Michael Berlemann & Marcel Thum, 2005. "Blooming landscapes in East Germany?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 6(4), pages 16-22, December.
  15. Contini, Bruno & Revelli, Riccardo, 1997. "Gross flows vs. net flows in the labor market: What is there to be learned?," Labour Economics, Elsevier, Elsevier, vol. 4(3), pages 245-263, September.
  16. 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.
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Cited by:
  1. Felbermayr, Gabriel & Impullitti, Giammario & Prat, Julien, 2014. "Firm Dynamics and Residual Inequality in Open Economies," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9855, C.E.P.R. Discussion Papers.
  2. Oliver Ludewig & Antje Weyh, 2011. "Die regionale Arbeitsplatzdynamik in Deutschland – Mehr Bewegung im Osten," Jahrbuch für Regionalwissenschaft, Springer, vol. 31(1), pages 27-56, June.
  3. 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.
  4. Beate Schirwitz, 2013. "Business Fluctuations, Job Flows and Trade Unions - Dynamics in the Economy," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, number 47, 8.
  5. Richard Duhautois & Fabrice Gilles, 2013. "Payroll tax reductions and job flows in France," Working Papers hal-01006652, HAL.

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