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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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Web page: http://www.tu-dresden.de/wiwi/
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Related research

Keywords: Job Creation and Destruction; Job Turnover; Employment Growth; Employment-weighted Regression;

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References

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  1. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  2. Alfred Stiglbauer & Florian Stahl & Rudolf Winter-Ebmer & Josef Zweimüller, 2003. "Job Creation and Job Destruction in a Regulated Labor Market: The Case of Austria," Empirica, Springer, vol. 30(2), pages 127-148, June.
  3. P.A. Geroski & José Mata & Pedro Portugal, 2007. "Founding Conditions and the Survival of New Firms," DRUID Working Papers 07-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  4. Steve J. Davis & John Haltiwanger, 1991. "Gross job creation, gross job destruction and employment reallocation," Working Paper Series, Macroeconomic Issues 91-5, Federal Reserve Bank of Chicago.
  5. Gómez-Salvador, Ramón & Messina, Julián & Vallanti, Giovanna, 2004. "Gross job flows and institutions in Europe," Working Paper Series 0318, European Central Bank.
  6. Timothy Dunne & John Haltiwanger & John Baldwin, 1994. "A Comparison of Job Creation and Job Destruction in Canada and the United States," Working Papers 94-2, Center for Economic Studies, U.S. Census Bureau.
  7. Baldwin, John & Picot, Garnett, 1995. " Employment Generation by Small Producers in the Canadian Manufacturing Sector," Small Business Economics, Springer, vol. 7(4), pages 317-31, 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, vol. 13(01), pages 34-39, 02.
  9. Boeri, Tito & Cramer, Ulrich, 1992. "Employment growth, incumbents and entrants : Evidence from Germany," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 545-565, December.
  10. Michael Berlemann & Marcel Thum, 2005. "Blooming landscapes in East Germany?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 6(4), pages 16-22, December.
  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, vol. 9(3), pages 211-24, June.
  12. 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, vol. 27(2), pages 245-260, October.
  13. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
  14. 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.
  15. Contini, Bruno & Revelli, Riccardo, 1997. "Gross flows vs. net flows in the labor market: What is there to be learned?," Labour Economics, Elsevier, vol. 4(3), pages 245-263, September.
  16. Olivier Jean Blanchard & Peter Diamond, 1992. "The Flow Approach to Labor Markets," NBER Working Papers 4000, National Bureau of Economic Research, Inc.
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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 2013-5, University of Salzburg.
  2. Gabriel Felbermayr & Giammario Impullitti & Julien Prat, 2014. "Firm Dynamics and Residual Inequality in Open Economies," Discussion Papers 2014-01, University of Nottingham, GEP.
  3. 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.
  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, number 47, July.

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