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Which Firms Create the Most Jobs in Developing Countries? Evidence from Tunisia

Author

Listed:
  • Bob Rijkers

    (The World Bank)

  • Hassen Arouri
  • Caroline Freund

    (World Bank)

  • Antonio Nucifora

Abstract

This paper examines private sector job creation in Tunisia over the period 1996-2010 using a unique database containing information on all registered private enterprises, including self-employment. In spite of stable GDP growth, overall net job creation was disappointing and firm dynamics were sluggish. The firm size distribution has remained skewed towards small firms, because of stagnation of incumbents and entrants starting small, typically as one-person firms (i.e., self-employment). Churning is limited, especially amongst large firms, and very few firms manage to grow. Post-entry, small firms are the worst performers in terms of job creation, even if they survive. Moreover, the association between productivity, profitability and job creation is feeble, pointing towards weaknesses in the re-allocative process. Weak net job creation thus appears to be due to insufficient firm dynamism rather than excessive job destruction.

Suggested Citation

  • Bob Rijkers & Hassen Arouri & Caroline Freund & Antonio Nucifora, 2015. "Which Firms Create the Most Jobs in Developing Countries? Evidence from Tunisia," Working Papers 956, Economic Research Forum, revised Oct 2015.
    • Handle: RePEc:erg:wpaper:956
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    References listed on IDEAS

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