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Job flows in chile

  • Oscar Landerretche
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    This paper is devoted to the construction of the panel and econometric use of the first labor panel database to study workplace creation and destruction in Chile. For local interest, the main feature of the paper is that it is the first time that representative and consistent series of creation and destruction are made available for the Chilean economy. For general interest, the main feature of the paper is the estimation of the economic relevance of workplace fragility in different sizes of firms. Once we control for sector and date dummies as well as for the characteristics of workers it seems clear that small firms are much more likely to destroy jobs and less likely to create them. The steady state of jobs in smaller firms, it seems, is generated by the mechanics of firm creation in the economy: new firms have to start small. But, controlling for that, the jobs and workplaces in these firms are more fragile. We also take advantage on a question on job destruction of the survey to show that small firms are more likely to go bankrupt and we show how this differential effect significantly increased after the Asian Crisis. We characterize the geographic and sector identity of the most fragile workplaces. We find them to be in the construction, commerce and services sectors and hence mainly in highly urbanized regions of the country. This emphasizes the importance (maybe even beyond the Chilean experience) of looking at fragility in sector representative databases.

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    File URL: http://www.econ.uchile.cl/uploads/publicacion/4da5fdc3-04a7-4d8b-84f5-ff685dfc4f60.pdf
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    Paper provided by University of Chile, Department of Economics in its series Working Papers with number wp240.

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    Date of creation: May 2007
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    Handle: RePEc:udc:wpaper:wp240
    Contact details of provider: Web page: http://www.econ.uchile.cl/

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    1. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    2. Forbes, Kristin J., 2003. "One Cost of the Chilean Capital Controls: Increased Financial Constraints for Smaller Traded Firms," Working papers 4273-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
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    6. Acemoglu, Daron & F. Newman, Andrew, 2002. "The labor market and corporate structure," European Economic Review, Elsevier, vol. 46(10), pages 1733-1756, December.
    7. Hoyt Bleakley & Kevin Cowan, 2005. "Corporate Dollar Debt and Depreciations: Much Ado about Nothing?," IDB Publications (Working Papers) 6693, Inter-American Development Bank.
    8. Holmstrom, Bengt & Tirole, Jean, 1997. "Financial Intermediation, Loanable Funds, and the Real Sector," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 663-91, August.
    9. Caballero, Ricardo J. & Krishnamurthy, Arvind, 2001. "International and domestic collateral constraints in a model of emerging market crises," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 513-548, December.
    10. Gertler, Mark & Gilchrist, Simon, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 309-40, May.
    11. Robert E. Hall, 2005. "Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market," NBER Working Papers 11183, National Bureau of Economic Research, Inc.
    12. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
    13. Stephen D. Oliner & Glenn D. Rudebusch, 1994. "Is there a broad credit channel for monetary policy?," Working Paper Series / Economic Activity Section 146, Board of Governors of the Federal Reserve System (U.S.).
    14. Gaston Gelos & Alejandro M. Werner, 1999. "Financial Liberalization, Credit Constraints, and Collateral; Investment in the Mexican Manufacturing Sector," IMF Working Papers 99/25, International Monetary Fund.
    15. Michael Devereux & Fabio Schiantarelli, 1990. "Investment, Financial Factors, and Cash Flow: Evidence from U.K. Panel Data," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 279-306 National Bureau of Economic Research, Inc.
    16. Edwards, Sebastian & Edwards, Alejandra Cox, 1991. "Monetarism and Liberalization," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226184890.
    17. Benavente, Jose Miguel & Johnson, Christian A. & Morande, Felipe G., 2003. "Debt composition and balance sheet effects of exchange rate depreciations: a firm-level analysis for Chile," Emerging Markets Review, Elsevier, vol. 4(4), pages 397-416, December.
    18. Greenwald, Bruce & Stiglitz, Joseph E & Weiss, Andrew, 1984. "Informational Imperfections in the Capital Market and Macroeconomic Fluctuations," American Economic Review, American Economic Association, vol. 74(2), pages 194-99, May.
    19. Francisco A. Gallego & F. Leonardo Hernández, 2003. "Microeconomic effects of capital controls: The chilean experience during the 1990s," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 8(3), pages 225-253.
    20. Oliner, Stephen D & Rudebusch, Glenn D, 1996. "Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance: Comment," American Economic Review, American Economic Association, vol. 86(1), pages 300-309, March.
    21. Paulson, Anna L. & Townsend, Robert, 2004. "Entrepreneurship and financial constraints in Thailand," Journal of Corporate Finance, Elsevier, vol. 10(2), pages 229-262, March.
    22. Kashyap, Anil K & Stein, Jeremy C & Wilcox, David W, 1996. "Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance: Reply," American Economic Review, American Economic Association, vol. 86(1), pages 310-14, March.
    23. Stiglitz, Joseph E & Weiss, Andrew, 1992. "Asymmetric Information in Credit Markets and Its Implications for Macro-economics," Oxford Economic Papers, Oxford University Press, vol. 44(4), pages 694-724, October.
    24. Ricardo J. Caballero & Arvind Krishnamurthy, 2002. "A Dual Liquidity Model for Emerging Markets," American Economic Review, American Economic Association, vol. 92(2), pages 33-37, May.
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