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Job creation and job destruction in a regulated labor market: The case of Austria

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We study Austrian job reallocation in the period of 1978 to 1998, using a large administrative dataset where we correct for "spurious" entries and exits of firms. We find that on average 9 out of 100 randomly selected jobs were created within the last year, and that about 9 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 U. S. This result is not surprising given the impact of tighter regulation and labor law in Austria.

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  • Alfred M Stiglbauer & Florian Stahl & Rudolf Winter-Ebmer & Josef Zweimüller, 2002. "Job creation and job destruction in a regulated labor market: The case of Austria," Economics working papers 2002-05, Department of Economics, Johannes Kepler University Linz, Austria.
  • Handle: RePEc:jku:econwp:2002_05
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    More about this item

    Keywords

    Labor reallocation; job flows; labor market regulation;
    All these keywords.

    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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