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on Microeconomic European Issues |
| By: | FUSCO Alessio; GUIO Anne-Catherine; MARLIER Eric |
| Abstract: | Since 2009, the European Union (EU) portfolio of commonly agreed social in-dicators includes measures of material deprivation. The rationale for this inclu-sion is that if purely income-based indicators of poverty and inequality are es-sential, they are nevertheless not sufficient to satisfactorily reflect the diversity of living conditions in the EU, especially since the 2004 and 2007 enlarge-ments. The paper analyses the relationship between income poverty and mate-rial deprivation in 25 European countries (24 EU Member States plus Norway) and aims at identifying the most important factors that determine the risk of being income poor and/or materially deprived. It is based on the 2007 cross-sectional data of the EU Statistics on Income and Living Conditions (EU-SILC) users’ data base. |
| Keywords: | material deprivation; income poverty; European Union; Eu-SILC; open method of coordination; social inclusion |
| JEL: | I32 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2011-04&r=eur |
| By: | Méritet, Sophie |
| Keywords: | Politiques publiques; Union européenne; France; Energie; |
| JEL: | Q48 Q4 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/5533&r=eur |
| By: | Olivier Bargain (School of Economics and UCD Geary Institute, University College Dublin and IZA); Mathias Dolls (University of Cologne and IZA); Dirk Neumann (University of Cologne and IZA); Sebastian Siegloch (University of Cologne and IZA); Andreas Peichl (University of Cologne, IZA and ISER) |
| Abstract: | Whether observed differences in redistributive policies across countries are the result of differences in social preferences or efficiency constraints is an important question that paves the debate about the optimality of welfare regimes. To shed new light on this question, we estimate labor supply elasticities on microdata and adopt an inverted optimal tax approach to characterize the redistributive preferences embodied in the welfare systems of 17 EU countries and the US. Implicit social welfare functions are broadly compatible with the fi ction of an optimizing Paretian social planner. Some exceptions due to generous demogrant transfers are consistent with the ignorance of behavioral responses by some European governments and are partly corrected by recent policy developments. Heterogeneity in leisure-consumption preferences somewhat affect the international comparison in degrees of revealed inequality aversion, but differences in social preferences are signifi cant only between broad groups of countries. |
| Keywords: | Social preferences, redistribution, optimal income taxation, labor supply |
| JEL: | H11 H21 D63 C63 |
| Date: | 2011–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201101&r=eur |
| By: | Tol, Richard S. J. |
| Abstract: | The European Commission did not publish a cost-benefit analysis for its 2020 climate package. This paper fills that gap, comparing the marginal costs and benefits of greenhouse gas emission reduction. The uncertainty about the marginal costs of climate change is large and skewed, and estimates partly reflect ethical choices (e.g., the discount rate). The 2010 carbon price in the ETS can readily be justified by a cost-benefit analysis. Emission reduction is not expensive provided that policy is well-designed, a condition not met by planned EU policy. It is probably twice as expensive as needed, costing one in ten years of economic growth. The EU targets for 2020 are unlikely to meet the benefit-cost test. For a standard discount rate, the benefit-cost ratio is rather poor (1/30). Only a very low discount rate would justify the 20% emission reduction target for 2020. |
| Keywords: | cost-benefit analysis/cost/Greenhouse Gas emission reduction/uncertainty/Climate change/Policy/growth/emission reduction target |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp367&r=eur |
| By: | Anthony T H Chin (Department of Economics, National University of Singapore); Zhang Peng (Department of Economics, National University of Singapore) |
| Abstract: | The European Union has proposed a Directive to include aviation activities in the Emission Trading Scheme (ETS) in 2012. The allowance allocation method which will be put in place is relatively easy to implement with low administration cost. However, careful scrutiny suggests that the allocation method does not favor airlines with high energy efficiency. This study proposes an alternative allowance allocation method which is fairer in that it rewards energy efficient airlines. Further, the new method is easy to implement with low administrative cost. The Cournot model serves as the theoretical foundation upon which the experiments are designed to simulate the aviation industry under the ETS. The equilibrium is calculated for each allowance allocation method. Results from experiments suggest consistency with theoretical outcomes. |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:sca:scaewp:1002&r=eur |
| By: | Radostina Primova |
| Abstract: | With the White Paper on European Governance (2001) the European Commission has introduced a new approach to European policy-making and civil society making public consultations an essential tool for improving governance and policy outputs. The present study seeks to explore the role of online public consultations in enhancing democratic legitimacy at the policy preparation stage for the empirical case of the EU energy policy. First, the paper looks at different concepts of legitimacy and discusses the role of civil society as a cure for the democratic deficit of European policy-making. Second, it examines civil society participation and input in the consultation on the Green paper A European Strategy for sustainable, competitive and secure energy and evaluates its impact on policy outputs by analysing two major legislative packages in the energy sector. Finally, it draws implications about the democratic quality of the consultation mechanism and its contribution to legitimising EU governance. |
| Keywords: | civil society; energy policy; European public space; governance; legitimacy |
| Date: | 2011–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:reconx:p0088&r=eur |
| By: | MIKUCKA Malgorzata |
| Abstract: | Whereas it is known that employment affects individual well-being, the literature on the effect of homemaking is so far inconclusive. The paper investigates the effect of being a housewife on well-being of women, using European Values Study data for 36 European countries (year 2008) and multilevel regression methodology. Results show that the effect of homemaking on well-being is overall positive and it varies across countries. Three possible explanations of this variation are examined. First hypothesis concerns traditional gender-role attitudes in a country. Results confirm that in more traditional countries homemakers have higher wellbeing, but only in western Europe. Effect of individual norms is strong: housewives with traditional gender-role attitudes declare higher well-being. Second hypothesis refers to the economic risk of specialization to homemaking, and states that higher divorce risk decreases well-being of housewives. Contrary to expectations, higher divorce risk in a country is accompanied by higher well-being of housewives. I interpret this as a sign of equality concerns incorporated into legal divorce procedures. Third hypothesis concerns positive and negative selection to homemaking. Results show that the relationship between prevalence of homemaking and the well-being of housewives is curvilinear. Highest well-being gains from homemaking occur in countries with lowest and highest prevalence of homemaking. |
| Keywords: | well-being; homemaking; housewife; women's employment |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2011-09&r=eur |
| By: | DICKES Paul; VALENTOVA Marie; BORSENBERGER Monique |
| Abstract: | This paper presents a theoretically based, multidimensional and comparable measurementof social cohesion applicable in 47 European countries using the most recent micro-level data of European Value Study (EVS) from 2008. The analysis is conducted in four steps. In the first part, we create a set of measurable intermediate indicators that correspond to social cohesion dimensions suggested by the theory. In the second part, we verify whether these indicators empirically corroborate the multidimensional structure of the concept proposed by the theory. The third part examines whether the obtained intermediate indicators of social cohesion form the same constructs across countries and whether they can yield a cross country equivalent measure of social cohesion. In the fourth step, composite scores of all dimensions of social cohesion are calculated for all 47 countries to demostrate applicability of this constructed measurement in comparative research. |
| Keywords: | social cohesion; measurement equivalence; multidimensional scaling; LISREL; multidimensional indicators |
| JEL: | D63 Z13 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2011-07&r=eur |
| By: | Prehn, Sören; Brümmer, Bernhard; Thompson, Stanley R. |
| Abstract: | The 2003 reforms of the Common Agricultural policy of the European Union introduced decoupled income transfers as the most prominent policy instrument. However, member states were given substantial discretion over the degree and timing of the reform implementation. As a result, different implementation schemes coexist within the EU, keeping certain parts of the income support coupled to current production levels. This coexistence leads to distortions of production incentives, factor misallocations, and artificial trade flows. Here, we examine these effects in the beef sector where full decoupling was not obligatory for all member states. Based on a cost minimization framework, we derive a sector-specific trade model with heterogeneous firms and quality differences. The model is used to examine the effects of different implementation schemes on intra-European calf trade. Empirical results confirm that the expected distortions to trade flows occured, violating the fundamental CAP principle of Market Unity. -- |
| Keywords: | 2003 CAP Reform,Partial Decoupling,Intra-European Calf Trade,Gravity Model,Heterogeneous Firms Trade Model |
| JEL: | F13 F14 Q17 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:daredp:1008&r=eur |
| By: | Deters, Henning |
| Abstract: | The working paper examines the decision-making process of what has most likely been the most contentious European environmental policy-item in 2009: the regulation 443/2009 setting carbon dioxide emission performance standards for new passenger cars. In contrast to the empirical trend of rather stringent protection levels, where environmental front-runner countries, encouraged by the Commission and the European Parliament, are able to set the pace, the regulation in question was largely shaped by the most reluctant member state's Germany with its high-volume, premium car manufacturers.By process-tracing the legislative decision-making, the paper accounts for this lowest-common-denominator outcome. Commission and EP had 'greener' preferences than the Council. Yet, both actors suffered from a of lack internal consistency, with national differences leading to strong in-fights between Commissioners and limiting the voting coherence of EP party-groups. The issue was therefore already highly politicized at the agenda-setting stage. This, and the fact that the dossier was handled in a fast-track procedure, curtailed Commission influence. In the Council negotiations, Germany was able to muster a potential blocking minority together with those, mostly east-European countries, were subsidiaries of German car companies are located. 'Greener' member states were, however, not prepared to veto down the regulation although they criticized its lack of ambition. -- Dieses Arbeitspapier untersucht den Entscheidungsprozess eines der am stärksten umstrittenen Gegenstände europäischer Umweltpolitik der vergangenen Jahre: Die Verordnung 443/2009 zur Verringerung der CO2-Emissionen von Personenkraftwagen. Im Gegensatz zu dem empirischen Trend eher strenger Schutzniveaus, bei dem die umweltpolitischen Spitzenreiter, unterstützt von Kommission und Europäischem Parlament (EP), die Leitlinien vorgeben, war die hier untersuchte Verordnung stark von den Vorstellungen des am wenigsten ambitionierten Mitgliedstaates geprägt, in diesem Fall Deutschland, mit seiner volkswirtschaftlich bedeutsamen und stark am Premium-Markt orientierten Automobilindustrie. Das Papier führt eine Prozessanalyse der Politikformulierung durch, um dieses Ergebnis aufzuklären. Obwohl Kommission und EP tatsächlich eine ambitionierte Verordnung befürworteten, konnten sie sich im interinstitutionellen Entscheidungsprozess letztlich nicht durchsetzen. Beide Akteure litten unter der geringen internen Kohärenz ihrer Positionen. Die nationalen Positionsunterschiede führten zu intensiven Konflikten zwischen den involvierten Generaldirektionen auf der einen, und schwacher Parteigruppendisziplin auf der anderen Seite. In den Ratsverhandlungen vermochte Deutschland gemeinsam mit den vorwiegend osteuropäischen Ländern, in denen Tochtergesellschaften und Produktionspartner deutscher Automobilhersteller ansässig sind, eine potentielle Sperrminorität herzustellen. Die 'grüneren' Mitgliedstaaten waren hingegen nicht bereit, die Verordnung abzulehnen, obwohl sie deren Anspruchsniveau als zu gering kritisierten. Der intensive Verteilungskonflikt im Lager der Automobilherstellerländer konnte mittels einer raffinierten Regelung zur Lastenteilung gemindert werden, machte aber dennoch eine Entscheidung auf höchster politischer Ebene notwendig. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:sfb597:142&r=eur |
| By: | Alessio, Moro; Galo, Nuño |
| Abstract: | In this paper we investigate the role of technological differences between the construction sector and the general economy in the evolution of real housing prices. In particular we ask whether the recent soar in housing prices across countries reflects the different trends of total factor productivity (TFP) in the construction sector versus the other sectors. To do this, we first compare housing and construction prices in the U.S., the U.K., Germany and Spain. We find that the two prices follow a similar pattern before 1997 and diverge afterwards in all countries. Second, we perform a growth accounting exercise to measure the contribution of relative TFP on the price of construction relative to GDP for the four countries. We find evidence of a strong positive contribution of relative TFP to construction prices in the case of the United States and Germany. Instead, in the case of Spain and the U.K., relative TFP has contributed negatively to the evolution of construction prices, which have grown due to the dynamics of wages and capital returns. We conclude that in these two countries, market conditions, rather than technological factors, have been the main culprits of the recent soar in housing prices. |
| Keywords: | House prices; TFP; growth accounting; Cobb-Douglas |
| JEL: | O11 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:28257&r=eur |
| By: | John Haltiwanger (University of Maryland, NBER, IZA); Stefano Scarpetta (OECD, IZA); Helena Schweiger (EBRD) |
| Abstract: | Somewhat surprisingly, cross-country empirical evidence (at least in the cross section) does not seem to support the predictions of standard models that economies with stricter regulations on hiring and firing should have a lower pace of job reallocation. One problem in exploring these issues empirically has been the difficulty of comparing countries on the basis of harmonised measures of job reallocation. A related problem is that there may be unobserved measurement or other factors accounting for differences in job reallocation across countries. This paper overcomes these challenges by using harmonised measures of job creation and destruction in a sample of 16 developed and emerging economies (including four transition economies), exploiting the country, industry and firm size dimensions. The analysis of variance in the paper shows that firm size effects are a dominant factor in accounting for the variation in the pace of job reallocation across country, industry and size cells. However, even after controlling for industry and size effects there remain significant differences in job flows across countries that could reflect differences in labour market regulations. We use the harmonised data to explore this hypothesis with a difference-in-difference approach. We find strong and robust evidence that stringent hiring and firing regulations tend to reduce the pace of job reallocation. |
| JEL: | O1 P2 P5 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:ebd:wpaper:116&r=eur |
| By: | John Armour (Oriel College, University of Oxford); Régis Blazy (LaRGE Research Center, Université de Strasbourg); Nirjhar Nigam (Luxembourg School of Finance) |
| Abstract: | The main aim of this paper is to find the legal characteristics that impact on the recovery rates. Previous studies (LLSV, Doing Business Report, World Bank) have usefully used a set of legal indexes to rank the bankruptcy law prevalent within the country. But they fail to identify the characteristics of bankruptcy procedures that create more recoveries. We give here elements of answer by taking into consideration two countries that are good representatives of the two main legal systems prevailing in Europe: France (Civil Law) and United Kingdom (Common Law). To enable this, we built original legal indexes comprising of 158 binary questions that highlight ten major dimensions of corporate bankruptcy procedures: (1) accessibility, (2) exclusivity, (3) bankruptcy costs, (4) production of information, (5) protection of the debtor’s assets, (6) protection of claims, (7) coordination of creditors, (8) decision power, (9) sanction of faulty management, and (10) inclination towards liquidation / reorganization. We then propose a mapping of procedures that shows a clear specialization between them. The French procedures (“redressement judiciaire” and “liquidation judiciaire”) are more protective of the debtor’s assets and favor more the coordination of secured claims, public claims, and unsecured claims. In UK, we find strong opposition between the procedures oriented to liquidation and the other procedures. We then use an original database of 833 French and UK bankruptcy files to measure the recovery rates that are generated by each procedure. We find strong differences be tween them. We then turn to OLS regressions and use our legal indexes to isolate the characteristics of bankruptcy law that significantly impact on the total recovery rate. By controlling for the value of assets, the structure of claims, the origins of default, and the firm characteristics, we test for several hypotheses. We first isolate the legal features of bankruptcy procedures that are associated to higher total recovery rates: namely, accessibility of the procedure, protection of the debtor’s assets, protection and coordination of claims, orientation towards reorganization, and bankruptcy costs. From that perspective, these costs are not sunk cost only, but can be viewed as the counterpart of a service provided by the practitioners that eventually serve the creditors’ recoveries. On the contrary, we find that the production of information under bankruptcy has a negative impact on total recoveries, probably due to the breach in confidentiality. Last, some dimensions of corporate bankruptcy law are not significantly related to total recovery rates (inclination towards liquidation, severity towards faulty management). |
| Keywords: | Bankruptcy laws, recovery rates, legal indexes. |
| JEL: | G33 K22 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2011-02&r=eur |
| By: | Francesco Devicienti; Valentina Gualtieri; Mariacristina Rossi |
| Abstract: | This article studies the dynamics and persistence of poverty in Italy during the nineties (1994-2001). Two definitions of poverty are analyzed: income poverty and a multidimensional index of life-style deprivation. For both definitions, poverty exit and re-entry rates are estimated and combined to compute measures of poverty persistence over multiple spells. A picture of high poverty turnover emerges according to either definition. Multi-spell hazard rate models have been estimated to assess the relative importance of several demographic and labor market characteristics in shaping poverty persistence at the individual level. The results highlight the weaknesses of the Italian labor market, the insufficiencies of the existing social security system and the deep territorial dualism in generating persistent poverty for certain groups of the population. We have stressed the ability of the two definitions to provide a generally consistent characterization of the poverty persistence risks faced by various population subgroups, but also the additional insights to be gained by analyzing the two definitions in parallel in a longitudinal context. |
| Keywords: | Income poverty; multidimensional deprivation; poverty persistence; hazard-rate models; multiple spells |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:173&r=eur |
| By: | Eileen Trzcinski; Elke Holst |
| Abstract: | This study used data from the German Socio-economic Panel to examine gender differences in the extent to which self-reported subjective well-being was associated with occupying a high-level managerial position in the labour market, compared with employment in non-leadership, non-high-level managerial positions, unemployment, and non-labour market participation. Our results indicated that a clear hierarchy exists for men in term of how status within the labour market was associated with subjective life satisfaction. Unemployed men were the least satisfied, followed by men who were not in the labour market, while men in leadership positions reported the highest level of subjective life satisfaction. For women, no statistically significant differences were observed among women in high-level managerial positions, women who worked in non-high-level positions, and women who specialized in household production, with no market work. Only women who were unemployed reported lower levels of life satisfaction, compared with women in other labour-market statuses. Our results lend evidence to the contention that men can "have it all", but women must still choose between career and family in Germany. We argue that interventions need to address how the non-pecuniary rewards associated with high-level managerial and leadership positions can be increased for women. Such policies would also likely serve to mitigate the "pipeline" problem concerning the number of women who are available to move into high positions in the private sector. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp356&r=eur |
| By: | Aida Caldera Sánchez; Åsa Johansson |
| Abstract: | The responsiveness of housing supply to changes in prices bears important implications for the evolution of housing prices and the speed of adjustment of housing markets. This paper estimates the long-run price elasticity of new housing supply in 21 OECD countries based on a stock-flow model of the housing market estimated within an error correction framework. Estimates suggest that housing supply responsiveness to price changes varies substantially across countries. New housing supply is relatively more flexible in North America and some Nordic countries, while it is more rigid in continental European countries and in the United Kingdom. The responsiveness of housing supply depends not only on national geographical and urban characteristics but also on policies, such as land use and planning regulations. The estimates are broadly in line with the limited available evidence on the responsiveness of housing supply in OECD countries.<P>La Réactivité de l'Offre de Logements dans les Pays de l'OCDE<BR>La réactivité de l'offre de logements à l'évolution des prix a des implications importantes pour l'évolution des prix du logement et la vitesse d'ajustement des marchés du logement. Ce document estime l'élasticité-prix à long terme de l'offre de nouveaux logements dans 21 pays de l'OCDE basée sur une approche stock-flux du marché du logement et un modèle à correction d’erreurs. Selon les estimations, la réactivité de l'offre de logements aux changements de prix varie considérablement selon les pays. L’offre de logements nouveaux est relativement plus souple en Amérique du Nord et certains pays nordiques, tandis qu'elle est plus rigide dans les pays du continent européen et au Royaume-Uni. La réactivité de l'offre ne dépend pas seulement des caractéristiques géographiques et urbaines, mais aussi des politiques publiques, telles que les règles d'urbanisme et d'utilisation du sol. Les estimations sont globalement en ligne avec les rares estimations disponibles sur la réactivité de l'offre de logements dans les pays de l'OCDE. |
| Keywords: | housing market, housing supply, housing prices, land use regulation, prix des logements, marché des logements, offre de logements, Règles d'utilisation du sol |
| JEL: | H20 R21 R23 R31 R38 |
| Date: | 2011–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:837-en&r=eur |
| By: | Stewart, James (Her Majesty's Treasury) |
| Abstract: | The challenges of infrastructure finance need to be considered in the context of long-term infrastructure planning. This article outlines the UK's new integrated approach to infrastructure planning to meet large investment needs against the backdrop of fiscal consolidation. The UK National Infrastructure Plan for the first time sets our a broad, integrated, corss-sectoral vision and plan for the substantial infrastructure investment required to underpin the UK's economic growth. This plan will act as a common reference point for the public and private sectors to achieve more effective infrastructure development. It will be updated on an annual basis. |
| Keywords: | Infrastructure investment; Infrastructure planning; Private infrastructure finance; United Kingdom; Spending review |
| JEL: | H54 |
| Date: | 2010–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:ris:eibpap:2010_006&r=eur |
| By: | Wagenvoort, Rien (European Investment Bank, Economic and Financial Studies); de Nicola, Carlo (European Investment Bank, Economic and Financial Studies); Kappeler, Andreas (European Investment Bank, Economic and Financial Studies) |
| Abstract: | This article is the first attempt to compile comprehensive data on infrastructure finance in Europe. We decompose infrastructure finance by institutional sector (i.e. public versus private) into its main components, which consist of traditional public procurement, project finance and finance by the corporate sector, and analyse how the roles of the public and private sectors in financing infrastructure have evolved over time, especially during the recent economic and financial crisis. In contrast with government finance that is slightly up, private finance, in particular project finance through Publi-Private Partnerships, has fallen substantially during the recent crisis, reversing, at least temporarily, the longer-term trend of more private and less public financing of infrastructure. |
| Keywords: | Infrastructure investment; Public-Private Partnerships; Project finance; Crisis impact |
| JEL: | G20 H54 L32 |
| Date: | 2010–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:ris:eibpap:2010_001&r=eur |
| By: | Dominique Meurs; Ariane Pailhé; Sophie Ponthieux |
| Abstract: | In this paper, we investigate the extent of the effects of children and child-related time out of the labor market on the gender wage gap in France, with special attention to its impact on the accumulation and composition of human capital. Measuring this impact requires detailed information on the individuals‟ activity history that is rarely available. The French survey "Families and Employers" (Ined, 2005) provides this information. We first look at men's and women's wage determinants, including the penalties associated with unemployment and time out of the labor market. We find that having controlled for the jobs' characteristics and selection into employment, there is a penalty attached to child-related time out of the labor market, which affects only women. We do not find any direct negative impact of children on women's current hourly wage at the mean. Then for a sub-sample of men and women aged from 39 to 49, we use a decomposition of the gender wage gap into an "interruption" wage gap between women and a gender wage gap between women who have never taken child-related time out and men; we find that the wage gap between men and women who have never interrupted their participation in the labor force is essentially "unexplained", while the wage gap between women who have had child-related interruptions and women who have not is essentially "explained". |
| Keywords: | Wages, Human capital, Children, Family pay gap, Statistical discrimination, Wage gap decomposition |
| JEL: | J13 J16 J24 J31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2011-3&r=eur |
| By: | Ibsen, Rikke (Aarhus School of Business); Westergård-Nielsen, Niels (Aarhus School of Business) |
| Abstract: | In this paper we will look at job creation and destruction in firms. We will answer the question if it is the large companies that create jobs, while the smaller companies are contributing much less. Or is it the young companies that create jobs? And who destroys the most jobs? In the crisis Denmark lost 186,000 jobs in the private sector. The question is where and how could these jobs be recreated. Are these issues specific to industries or are they universal? The data used is register data on workplaces and firms for the period 1980-2007. The base unit of data is the workplace. The company (firm) is the legal entity. A company can have many sites, and one of the ways companies can grow is by expanding with multiple sites. This can happen by mergers and acquisitions but can also happen by creating "daughter workplaces". It is therefore essential to look at workplaces and firms at the same time. A complication here is that firms switch ID over time because of change of ownership, mergers and divisions. Data must be corrected so that these administrative issues will not affect the survival of firms. The data are used in a way where we can cover firm birth and firm death, spin-offs and mergers. The analysis will make it possible to differentiate between net and gross creation of jobs because we can follow each single individual in and out of jobs. We have for Denmark found that size on its own does not have a big impact, but young firms are much more likely to contribute to a positive growth. For the U.S. it has been found that the growth in jobs comes from small businesses. A closer analysis though shows that the main factor here is the firm age. Thus, it is found that young firms net create the most jobs, but they are also responsible for the most job destructions. |
| Keywords: | job creation, job destruction, firm age, firm size, education, employer-employee data |
| JEL: | E24 L25 L26 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5458&r=eur |