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Assessing job flows across countries : the role of industry, firm size, and regulations

Author: John C Haltiwanger; Stefano Scarpetta; Helena Schweiger
Publisher: [Washington, D.C.] : World Bank, Human Development Network, Social Protection Team, [2006]
Series: Policy research working papers, 4070.
Edition/Format:   Print book : International government publication : EnglishView all editions and formats
Summary:
This paper reviews the process of job creation and destruction across a sample of 16 industrial and emerging economies over the past decade. It exploits a harmonized firm-level data set drawn from business registers and enterprise census data. The paper assesses the importance of technological factors that characterize different industries in explaining cross-country differences in job flows. It shows that industry  Read more...
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Additional Physical Format: Online version:
Haltiwanger, John C.
Assessing job flows across countries.
[Washington, D.C.] : World Bank, Human Development Network, Social Protection Team, [2006]
(OCoLC)647471052
Material Type: Government publication, International government publication, Internet resource
Document Type: Book, Internet Resource
All Authors / Contributors: John C Haltiwanger; Stefano Scarpetta; Helena Schweiger
OCLC Number: 123470815
Notes: "November 2006"--Cover.
Description: 54 pages : illustrations ; 28 cm.
Series Title: Policy research working papers, 4070.
Responsibility: John Haltiwanger, Stefano Scarpetta, Helena Schweiger.

Abstract:

This paper reviews the process of job creation and destruction across a sample of 16 industrial and emerging economies over the past decade. It exploits a harmonized firm-level data set drawn from business registers and enterprise census data. The paper assesses the importance of technological factors that characterize different industries in explaining cross-country differences in job flows. It shows that industry effects play an important role in shaping job flows at the aggregate level. Even more importantly, differences in the size composition of firms-within each industry-explain a large fraction of the overall variability in job creation and destruction. However, even after controlling for industry/technology and size factors there remain significant differences in job flows across countries that could reflect differences in business environment conditions. The authors look at one factor shaping the business environment, namely, regulations on hiring and firing of workers. To minimize possible endogeneity and omitted variable problems associated with cross-country regressions, we use a difference-in-difference approach. The empirical results suggest that stringent hiring and firing costs reduce job turnover, especially in those industries that require more frequent labor adjustment. Regulations also distort the patterns of industry/size flows. Within each industry, medium and large firms are more severely affected by stringent labor regulations, while small firms are less affected, probably because they are partially exempted from such regulations or can more easily circumvent them.

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