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Do Startups Provide Employment Opportunities for Disadvantaged Workers?

Author

Listed:
  • Fackler, Daniel

    () (IWH Halle)

  • Fuchs, Michaela

    () (Institute for Employment Research (IAB), Nuremberg)

  • Hölscher, Lisa

    () (Halle Institute for Economic Research)

  • Schnabel, Claus

    () (University of Erlangen-Nuremberg)

Abstract

This paper analyzes whether startups offer job opportunities to workers potentially facing labor market problems. It compares the hiring patterns of startups and incumbents in the period 2003 to 2014 using administrative linked employer-employee data for Germany that allow to take the complete employment biographies of newly hired workers into account. The results indicate that young plants are more likely than incumbents to hire older and foreign applicants as well as workers who have instable employment biographies, come from unemployment or outside the labor force, or were affected by a plant closure. However, an analysis of entry wages reveals that disadvantageous worker characteristics come along with higher wage penalties in startups than in incumbents. Therefore, even if startups provide employment opportunities for certain groups of disadvantaged workers, the quality of these jobs in terms of initial remuneration seems to be low.

Suggested Citation

  • Fackler, Daniel & Fuchs, Michaela & Hölscher, Lisa & Schnabel, Claus, 2018. "Do Startups Provide Employment Opportunities for Disadvantaged Workers?," IZA Discussion Papers 11556, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11556
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    References listed on IDEAS

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    More about this item

    Keywords

    startups; young firms; employment; wages; linked employer-employee data;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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