Associating firm characteristics with employment: evidence from Eurozone periphery

Unemployment is probably the most dramatic outcome of the economic crises, and the loss of jobs is crucial for prosperity and social cohesion. Because of that a strong debate has been lately generated (mainly after 2007), concerning the appropriate policy measures in order to arrest that phenomenon. In this paper, we focus on selected Eurozone country-members that were mostly affected by current crisis, imposing austerity measures and decreasing employment. A large number of listed firms from Eurozone Periphery are examined relative to the rate of employment's change during the last decade (2002-2012), and two classes of firms are compared: those that increase and those that decrease employment in the period examined. The main scope is to identify specific characteristics that are associated with employment's growth. For that purpose, firm and country-specific data are collected and statistically tested for their ability to interpret the increase in employment. Empirical findings indicate that among other factors, innovative activity and financial performance are strongly correlated with employment. The latter highlights the need for focused policy measures and state aid in order to spur employment growth in economies that were heavily affected by recession. On the other hand, results also imply that horizontal budgetary cuts in most firms and sectors of the economy probably deteriorate instead of alleviate recession.