Risky Business? Earnings Prospects of Employees at Young Firms

Pawel Adrjan

No 852, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Young ï¬ rms are an engine of job creation, but little is known about the quality of the jobs that they offer. I use a matched employer-employee dataset to study how starting wages and lifecycle earnings of employees differ between young and mature ï¬ rms. I ï¬ nd that young ï¬ rms pay a small premium to new hires, but subsequent wage growth is better at mature ï¬ rms, both within continuing job matches and when individuals change jobs. These results are conï¬ rmed by several approaches to addressing sorting and selection of employees into ï¬ rms of different ages. There is substantial heterogeneity of outcomes: the few young ï¬ rms that survive and become highly productive pay higher wages to employees from the outset than less successful young ï¬ rms. Overall, highly-paid and stable jobs at young ï¬ rms are rare. Policies that aim to stimulate job growth by encouraging the formation of new ï¬ rms should therefore pay close attention to the types of ï¬ rms that form as a result.

JEL-codes: J21 J23 J31 L26 (search for similar items in EconPapers)
Date: 2018-06-01
New Economics Papers: this item is included in nep-ent, nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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