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Job Flows and Establishment Characteristics: Variations Across U.S. Metropolitan Areas

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  • R. Jason Faberman

Abstract

This paper addresses the role played within metropolitan areas by heterogeneous agent models of constant churning. The evidence shows positive relationships between job turnover, young establishments, and metropolitan employment growth. Most areas, however, differ in their levels of job creation rather than job destruction. Results persist after controlling for regional differences in industry, but less so when controlling for differences in the establishment age distribution, and are consistent overall with standard models of creative destruction. Evidence from several entering cohorts, however, contradicts the vintage replacement process of creative destruction models. Namely, job destruction decreases as establishments age and there is no clear inverse relation between establishment entry rates and exit ages. These patterns are instead consistent with a turnover process seen in standard models of firm learning. Further evidence suggests that these patterns vary systematically with the overall employment growth of a region. Together, the results suggest that (i) processes of both creative destruction and firm learning may matter for local labor dynamics, but future models will have to reconcile with this new evidence, and (ii) intrinsic local factors, such as the ???business climate???, may affect the dynamics of both processes.

Suggested Citation

  • R. Jason Faberman, 2003. "Job Flows and Establishment Characteristics: Variations Across U.S. Metropolitan Areas," William Davidson Institute Working Papers Series 2003-609, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2003-609
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    References listed on IDEAS

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    Cited by:

    1. John Francis, 2007. "Asymmetries in regional labor markets, migration and economic geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(1), pages 125-143, March.
    2. Ouyang, Min, 2009. "The scarring effect of recessions," Journal of Monetary Economics, Elsevier, vol. 56(2), pages 184-199, March.
    3. Huber, Peter & Oberhofer, Harald & Pfaffermayr, Michael, 2017. "Who creates jobs? Econometric modeling and evidence for Austrian firm level data," European Economic Review, Elsevier, vol. 91(C), pages 57-71.
    4. Fernando Alvarez & Robert Shimer, 2011. "Search and Rest Unemployment," Econometrica, Econometric Society, vol. 79(1), pages 75-122, January.
    5. Peter Huber & Harald Oberhofer & Michael Pfaffermayr, 2012. "Who Creates Jobs? Estimating Job Creation Rates at the Firm Level," WIFO Working Papers 435, WIFO.

    More about this item

    Keywords

    job turnover; regional and urban growth; creative destruction; firm learning;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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