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Who creates jobs? Econometric modeling and evidence for Austrian firm level data

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  • Huber, Peter
  • Oberhofer, Harald
  • Pfaffermayr, Michael

Abstract

This paper provides evidence on the role of firm size and firm age for firm level net job creation in the Austrian economy between 1993 and 2013 and during the Great Recession. We propose a new estimation strategy based on a two-part model to decompose behavioral differences between exiting and surviving firms. Young firms contribute most to net job creation, despite high relative exit rates, due to high growth rates among young surviving firms. Small firms have similar job creation rates conditional on survival as large firms. Small firms' contribution to job creation is, however, smaller due to higher exit rates. The up-or-out dynamics characterizing less regulated economies such as the US also apply to the more regulated Austrian economy. During the Great Recession both the relative net job creation rate conditional on survival and the relative survival probability of young firms decreased. The relative contribution of small firms to net job creation, by contrast, increased due to increased relative job creation rates of small firms conditional on survival.

Suggested Citation

  • Huber, Peter & Oberhofer, Harald & Pfaffermayr, Michael, 2017. "Who creates jobs? Econometric modeling and evidence for Austrian firm level data," European Economic Review, Elsevier, vol. 91(C), pages 57-71.
  • Handle: RePEc:eee:eecrev:v:91:y:2017:i:c:p:57-71
    DOI: 10.1016/j.euroecorev.2016.09.008
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    1. repec:zbw:svrwjg:201819 is not listed on IDEAS
    2. repec:wfo:wstudy:60592 is not listed on IDEAS
    3. Gugler, Klaus & Weichselbaumer, Michael & Zulehner, Christine, 2017. "Effects of government spending on employment: Evidence from winners and runners-up in procurement auctions," CEPR Discussion Papers 12548, C.E.P.R. Discussion Papers.
    4. Erhardt, Eva, 2017. "Who persistently creates jobs? Absolute versus relative high-growth firms," MPRA Paper 79307, University Library of Munich, Germany.

    More about this item

    Keywords

    Net job creation; Firm size; Firm age; One-part versus two-part models; Austria; Great recession;

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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