Who Creates Jobs? Estimating Job Creation Rates at the Firm Level

Arbeitspapier

This paper shows that applying simple employment-weighted OLS estimation to Davis - Haltiwanger - Schuh (1996) firm level job creation rates taking the values 2 and -2 for entering and exiting firms, respectively, provides biased and inconsistent parameter estimates. Consequently, we argue that entries and exits should be analysed separately and propose an alternative, consistent estimation procedure assuming that the size of continuing firms follows a lognormal distribution. A small-scale Monte Carlo analysis confirms the analytical results. Using a sample of Austrian firms, we demonstrate that the impact of small firms on net job creation is substantially underestimated when applying employment-weighted OLS estimation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIFO Working Papers ; No. 435

Classification and Topics

• Classification: Wirtschaft
• Subject: Job creation ; DHS growth rate ; firm size ; firm age ; Monte Carlo simulation ; Arbeitsnachfrage ; Unternehmenswachstum ; Betriebsgröße ; Monte-Carlo-Simulation ; Österreich

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Huber, Peter ; Oberhofer, Harald ; Pfaffermayr, Michael
• Event: Veröffentlichung
• (who): Austrian Institute of Economic Research (WIFO)
• (where): Vienna
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/128983
• Last update: 10.03.2025, 11:43 AM CET