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Hiring opportunities for new firms and the business cycle

Author

Listed:
  • Udo Brixy

    (Institute for Employment Research (IAB)
    Ludwig-Maximilians-Universität)

  • Martin Murmann

    (Bern University of Applied Sciences
    University of Zurich
    Leibniz Centre for European Economic Research (ZEW))

Abstract

Whether firms founded during or outside economic crises have greater growth potential is an important question for both prospective entrepreneurs and policy makers. Existing research offers conflicting answers, and mostly either focuses on aggregate cohort-level effects or selectively excludes small new firms from the analyses. Using extensive linked employer-employee data on young German firms around and during the Global Financial Crisis, a period of sharply reduced access to external capital and recession, we show that young firms respond to cyclical conditions in highly heterogeneous ways. Our firm-level results reveal that the average new firm found it easier to hire its first employees when it was founded during the crisis. These firms achieved countercyclical growth by hiring career entrants. More specifically, hiring in very young (

Suggested Citation

  • Udo Brixy & Martin Murmann, 2025. "Hiring opportunities for new firms and the business cycle," Small Business Economics, Springer, vol. 64(3), pages 1387-1413, March.
    • Handle: RePEc:kap:sbusec:v:64:y:2025:i:3:d:10.1007_s11187-024-00948-6
    DOI: 10.1007/s11187-024-00948-6
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    More about this item

    Keywords

    Firm growth; Hiring; Entrepreneurship; Business cycle; Global Financial Crisis;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • 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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