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The determinants of job creation and destruction: plant-level evidence for Eastern and Western Germany


  • Fuchs, Michaela
  • Weyh, Antje


We examine job creation and destruction in Eastern and Western Germany for the period of 1999 to 2004, using a large dataset, which enables us to capture clearly entries and exits. There are pronounced differences between the two parts of Germany in terms of magnitude and composition of gross job flows. Considering interaction effects between all variables, weighted regressions show that job creation and destruction can be explained to a large part by plant-specific factors. The pattern found to be pervasive in descriptive studies for other countries that job reallocation rates diminish with firm size and firm age also holds true for Germany. Given that East German plants are smaller and younger than their West German counterparts, this finding largely explains the differences between the East and West German labour dynamics.

Suggested Citation

  • Fuchs, Michaela & Weyh, Antje, 2008. "The determinants of job creation and destruction: plant-level evidence for Eastern and Western Germany," Dresden Discussion Paper Series in Economics 02/08, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
  • Handle: RePEc:zbw:tuddps:0208

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    References listed on IDEAS

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    Cited by:

    1. Fackler, Daniel & Müller, Steffen & Stegmaier, Jens, 2016. "Plant-level employment development before collective displacements: Comparing mass layoffs, plant closures, and bankruptcies," IWH Discussion Papers 27/2016, Halle Institute for Economic Research (IWH).
    2. Horbach, Jens & Janser, Markus, 2016. "The role of innovation and agglomeration for employment growth in the environmental sector," Annual Conference 2016 (Augsburg): Demographic Change 145500, Verein für Socialpolitik / German Economic Association.
    3. Felbermayr, Gabriel & Impullitti, Giammario & Prat, Julien, 2014. "Firm Dynamics and Residual Inequality in Open Economies," IZA Discussion Papers 7960, Institute for the Study of Labor (IZA).
    4. Mitsoyo Ando & Fukunari Kimura, 2015. "Globalization and Domestic Operations: Applying the JC/JD Method to Japanese Manufacturing Firms," Asian Economic Papers, MIT Press, vol. 14(2), pages 1-35, Summer.
    5. Fackler, Daniel & Hank, Eva, 2016. "Who buffers income losses after job displacement? The role of alternative income sources, the family, and the state," IWH Discussion Papers 28/2016, Halle Institute for Economic Research (IWH).
    6. Horbach, Jens & Janser, Markus, 2015. "The role of innovation and agglomeration for employment growth in the environmental sector," IAB Discussion Paper 201516, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Daniel Fackler & Eva Hank, 2016. "Who Buffers Income Losses after Job Displacement? The Role of Alternative Income Sources, the Family, and the State," SOEPpapers on Multidisciplinary Panel Data Research 863, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Oliver Ludewig & Antje Weyh, 2011. "Die regionale Arbeitsplatzdynamik in Deutschland – Mehr Bewegung im Osten," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 31(1), pages 27-56, June.
    9. Michaela Fuchs & Antje Weyh, 2014. "The pre-exit performance of German plants - How long is the 'shadow of death'?," ERSA conference papers ersa14p1644, European Regional Science Association.
    10. Hank, Eva & Fackler, Daniel, 2017. "Who buffers income losses after job displacement? The role of alternative income sources, the family, and the state," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168098, Verein für Socialpolitik / German Economic Association.
    11. Peter Huber & Harald Oberhofer & Michael Pfaffermayr, 2012. "Who Creates Jobs? Estimating Job Creation Rates at the Firm Level," WIFO Working Papers 435, WIFO.
    12. Richard Duhautois & Fabrice Gilles, 2013. "Payroll tax reductions and job flows in France," Working Papers hal-01006652, HAL.
    13. Beate Schirwitz, 2013. "Business Fluctuations, Job Flows and Trade Unions - Dynamics in the Economy," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 47, November.
    14. ANDO Mitsuyo & KIMURA Fukunari, 2017. "Job Creation and Destruction at the Levels of Intra-firm Sections, Firms, and Industries in Globalization: The case of Japanese manufacturing firms," Discussion papers 17100, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item


    Job Creation and Destruction; Job Turnover; Employment Growth; Employment-weighted Regression;

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure


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