Competition, Market Structure and Job Turnover
Data for rates of job turnover among plants in the Swedish economy in 1986-97 imply that in a typical year in a representative industry one out of six jobs disappeared, and a corresponding number of jobs were created. Job turnover is counter-cyclical, with no trend, and is higher for skilled jobs, and lower in manufacturing, than for all jobs. The rate of job turnover seems to be higher in industries with high rates of innovation and market growth, which may indicate that the volatility of firm specific demand and supply shocks is higher in such industries. Moreover, for given shocks, turnover is higher in industries with many small plants and low return on capital. The results support the hypothesis that market shares are more stable, and thus reallocation of jobs limited, in industries where firms have strong market power. Finally, there is less job turnover in export oriented industries where foreign ownership is widespread. Firms selling in many markets and/or producing in different locations may be able to even out the employment effects of shocks specific to individual markets and/or locations.
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Volume (Year): 3 (2003)
Issue (Month): 3 (September)
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1874-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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