Job Creation, Job Destruction and Plant Turnover in Norvegian Manufacturing

We examine the magnitude and patterns of job creation and job destruction among Norwegian manufacturing plants. We find that 8.4 percent of the manufacturing jobs are eliminated annually, while new jobs constitute 7.1 percent of manufacturing employment in an average year. Even in a serious recession year, a considerable number of new jobs are created. About two thirds of the job reallocation take place within disaggregated industries. We show that entry and exit of plants are substantially more important for job reallocation in the long run than in the year-to-year changes. Small plants and small firms are net creators of jobs in the period we consider when manufacturing employment was declining. Our results provide support to selection models a la Jovanovic (1982), while vintage-capital models seem to be largely irrelevant as models of plant heterogeneity.