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Job Flows and Plant Size Dynamics: Traditional Measures and Alternative Econometric Techniques
Author(s) -
Garibaldi Pietro
Publication year - 2000
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/1467-9914.00130
Subject(s) - econometrics , convergence (economics) , economics , panel data , job creation , regression , dynamics (music) , econometric analysis , manufacturing sector , labour economics , statistics , macroeconomics , mathematics , physics , acoustics
This paper measures the relation between job flows and establishment size, applying econometric techniques best suited for analyzing the long‐run dynamics of large cross‐section. Using a balanced panel from the Mexican manufacturing sector, it shows that, in line with existing evidence, initially small firms create proportionally more jobs than large firms. Since these results suffer from regression toward the mean, the paper applies an alternative technique and does not find any long‐run tendency of small establishments converging toward the mean. Furthermore, it shows how cross‐sectional dynamics across industries varies, and how it is linked to gross and net flows in each sector. Convergence to the mean is observed in relatively stable industries, with asymmetric dynamic behavior between expanding and declining industries.