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The Process of Job Creation and Job Destruction in the Italian Economy
Author(s) -
Contini Bruno,
Revelli Riccardo
Publication year - 1987
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/j.1467-9914.1987.tb00122.x
Subject(s) - job creation , recession , labour economics , business , business cycle , work (physics) , unemployment , economy , economics , economic growth , engineering , mechanical engineering , keynesian economics
Longitudinal analysis of labour flows provides a number of important indications on the characteristics of job creation and job destruction in the Italian economy, and on the role played by small firms in this process. The main indications may be summarized as follows: 1)the ratio of total separations to total work‐force is remarkably high, and almost completely independent of the business cycle: one out of four workers leaves his/her position each year in the economy at large. In the small firms sector alone turnover is much higher, with total separations almost approaching 50|X% of employment; 2)as the economy takes a downturn, it is mainly the number of jobs created through expansion of existing firms that follows this cycle, while separations remain roughly constant; 3)the proportion of jobs created via the establishment of new firms is modest compared to that attributable to the expansion of existing plants (16.0‐14.491)). Likewise, the proportion of job losses due to closures visi vis employment shedding by contracting firms, is of the same order of magnitude; 4)job creation and destruction is very high in the small firm sector. Employment in firms of dimension (0‐19) is 25.8 % of total employment at the beginning of the observation period (1978) and reaches 28% at its end (1984). Yet the proportion of job creation attributable to small firms is approximately 60% of the new positions due to expansion of existing firms in manufacturing, and 68% in the services. The fraction of jobs destroyed by small firms is somewhat lower: about 46% in manufacturing and 59% in the services; 5)he small firms contribution to net job creation appears even more remarkable both in the aggregate, as well as within all sectors of economic activity and geographical areas. In 1978‐80 net employment change in manufacturing is 106,000 units per year; correspondingly net job creation by firms (0‐19) is alone 222,000. In the services the proportion between net employment change and the share of the small firms is 1:3. In 1981‐83, while in manufacturing over 213,000 jobs are destroyed on average each year, net creation by small firms is still positive (+ 48,000); in the services the overall change is very small (+ 3,000), while the net contribution of small firms is + 53,000.