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Small and Large Establishments, Employment Growth and Structural Change
Author(s) -
Boeri Tito
Publication year - 1988
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.1467-9914.1988.tb00137.x
Subject(s) - pace , job creation , demographic economics , sample (material) , labour economics , business , scale (ratio) , descriptive statistics , economics , statistics , geography , chemistry , cartography , mathematics , geodesy , chromatography
This paper develops some simple descriptive techniques for analysing the relation between firm size, employment growth and structural change, in the light of the current availability in several OECD countries of longitudinal data on business firms. The methods proposed seem to perform well in defining the borderline between statistical artifacts, and genuine tendencies of the job generation process, especially as far as the contribution of small and large firms to employment growth is concerned. Based on the application of the aforementioned methodology to data on establishments in Germany in the period 1977‐87, the study finds that: 1)Changes in the scale of continuing establishments do not seem to contribute in the medium term to employment growth; net job creation (destruction) is mainly due to the pace of establishments entries (exits). 2)Especially manufacturing units grow or decline in a way which is largely independent of the employment performance of the sector to which they belong, i. e., there is a fairly large degree of heterogeneity in the behaviour of establishments producing the same kind of goods. 3)A large component of the observed positive employment performance of small business units is accounted for by statistical phenomena, such as the sample selection induced by exits from the population of business units, and the tendency of continuing establishments to regress to the mean size. 4)The size of continuing establishments is relatively stable over time, and, contrary to common biological analogies on the life‐cycle of the firms, it seems to be more likely that an establishment starts out being large than that it starts out being small and gradually becomes large.