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How Large are the Direct Employment Effects of New Businesses? An Empirical Investigation for West Germany

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  • Michael Fritsch
  • Antje Weyh

Abstract

We analyze the development of employment in start-up cohorts, which is the direct gross employment effect of the new businesses. The data is for West Germany and covers the 1984–2002 period. While total employment in the cohorts remains above the initial level in manufacturing, we find a pronounced decline of employment below this level in the service sector. Only a small fraction of the firms create a considerable amount of jobs. The contribution that the start-up cohorts of the 1984–2002 period made to total employment in 2002 is nearly three times as high in services as in manufacturing. Copyright Springer 2006

Suggested Citation

  • 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.
  • Handle: RePEc:kap:sbusec:v:27:y:2006:i:2:p:245-260
    DOI: 10.1007/s11187-006-0005-z
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    References listed on IDEAS

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    1. Grotz, Reinhold & Brixy, Udo, 2002. "Entry-rates, the share of surviving businesses and employment growth: differences between West and East Germany since unification," ERSA conference papers ersa02p175, European Regional Science Association.
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    More about this item

    Keywords

    employment change; new firms; start-up cohorts; D21; L10; L29; M13;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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