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The Dynamics of Employment Growth: New Evidence from 18 Countries

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  • Chiara Criscuolo
  • Peter N. Gal
  • Carlo Menon

Abstract

Motivated by the on-going interest of policy makers in the sources of job creation, this paper presents results from a new OECD project on the dynamics of employment (DynEmp) based on an innovative methodology using firm-level data (i.e. national business registers or similar sources). It demonstrates that among small and medium sized enterprises (SMEs), young firms play a central role in creating jobs, whereas old SMEs tend to destroy jobs. This pattern holds robustly across 17 OECD countries and Brazil, extending recent evidence found in the United States. The paper also shows that young firms are always net job creators throughout the business cycle, even during the financial crisis. During the crisis, entry and post-entry growth by young firms were affected most heavily, although downsizing by old firms was responsible for most job losses. The results also highlight large cross-country differences in the growth potential of young firms, pointing to the role played by national policies in enabling successful firms to create jobs.

Suggested Citation

  • Chiara Criscuolo & Peter N. Gal & Carlo Menon, 2014. "The Dynamics of Employment Growth: New Evidence from 18 Countries," CEP Discussion Papers dp1274, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1274
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    Cited by:

    1. Decker, Ryan A. & Haltiwanger, John & Jarmin, Ron S. & Miranda, Javier, 2016. "Where has all the skewness gone? The decline in high-growth (young) firms in the U.S," European Economic Review, Elsevier, vol. 86(C), pages 4-23.
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    6. Dan Andrews & Chiara Criscuolo & Peter Gal & Carlo Menon, 2015. "Firm Dynamics and Public Policy: Evidence from OECD Countries," RBA Annual Conference Volume,in: Angus Moore & John Simon (ed.), Small Business Conditions and Finance Reserve Bank of Australia.
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    11. Emmanuele Bobbio, 2017. "Tax Evasion, Firm Dynamics and Growth," 2017 Meeting Papers 683, Society for Economic Dynamics.
    12. repec:cpp:issued:v:43:y:2017:i:3:p:202-220 is not listed on IDEAS
    13. Shutao Cao & Mohanad Salameh & Mai Seki & Pierre St-Amant, 2017. "Trends in Firm Entry and New Entrepreneurship in Canada," Canadian Public Policy, University of Toronto Press, vol. 43(3), pages 202-220, September.
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    23. repec:bla:jecrev:v:68:y:2017:i:2:p:188-199 is not listed on IDEAS
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    More about this item

    Keywords

    Business dynamics; employment growth; small businesses; business demography; startups; great recession; job creation and destruction;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • 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

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