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Job Creation and Job Destruction in a Regulated Labour Market: The Case of Austria

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  • Stahl, Florian
  • Stiglbauer, Alfred M.
  • Winter-Ebmer, Rudolf
  • Zweimüller, Josef

Abstract

We study Austrian job reallocation in the period of 1978–98, using a large administrative dataset where we correct for ‘spurious’ entries and exits of firms. We find that on average nine out of 100 randomly selected jobs were created within the last year, and that about nine out of randomly selected 100 jobs will be destroyed within the next year. Hence, Austrian job flows seem to be of comparable magnitude as in other countries, similar to the well-known results of Davis et al. (1996) for the United States. Job reallocation appears to be driven primarily by idiosyncratic shocks. However, job creation increases significantly during cyclical upswings whereas job destruction rises in downturns. We also find substantial persistence of job creation and destruction. We show that the pronounced pattern of job reallocation rates falling with firm size and age continues to hold when we use a set of controls. Finally, we show that - controlling for sector and for firm size composition - Austrian job reallocation rates are only half the rates for the US. This result is not surprising given the impact of tighter regulation and labor law in Austria.

Suggested Citation

  • Stahl, Florian & Stiglbauer, Alfred M. & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2002. "Job Creation and Job Destruction in a Regulated Labour Market: The Case of Austria," CEPR Discussion Papers 3497, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3497
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    References listed on IDEAS

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    1. Burgess, Simon & Lane, Julia & Stevens, David, 2000. "Job Flows, Worker Flows, and Churning," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 473-502, July.
    2. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
    3. David Margolis, 1999. "Worker Displacement in France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00370589, HAL.
    4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    5. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
    6. Caballero, Ricardo J & Hammour, Mohamad L, 1994. "The Cleansing Effect of Recessions," American Economic Review, American Economic Association, vol. 84(5), pages 1350-1368, December.
    7. Jonathan S. Leonard, 1986. "In the Wrong Place at the Wrong Time: The Extent of Frictional and Structural Unemployment," NBER Working Papers 1979, National Bureau of Economic Research, Inc.
    8. Helmut Hofer & Karl Pichelmann & Andreas-Ulrich Schuh, 2001. "Price and quantity adjustments in the Austrian labour market," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 581-592.
    9. Winter-Ebmer, Rudolf, 2001. "Firm Size, Earnings, and Displacement Risk," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 474-486, July.
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    More about this item

    Keywords

    job flows; labour market regulation; labour reallocation;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • 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

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