Employment in family firms: Less but safe? Analyzing labor demand of German family firms with a treatment model for panel data

Arnd Kölling

No 92, Working Papers from Berlin School of Economics and Law, Institute of Management Berlin (IMB)

Abstract: This paper analyzes the differences in labor demand and labor turnover between family and nonfamily firms. The majority of firms in modern economies and, therefore, also in Germany are family controlled. These firms seem to have better employment performance than non-family controlled companies. Therefore, this study applies a treatment model for panel data using family firms as a treatment indicator. Moreover, a propensity score estimation is introduced to the model to control for selectivity. The results of the estimations indicate that labor demand is possibly larger because of family members joining the firms as extra employees. Moreover, labor turnover is lower, thus supporting the assumption that family firms offer some kind of implicit contracts to their employees and are more loss averse than other establishments. However, evidence of these results for establishments with 20 or more employees is generally weaker, indicating that the differences between both types of firms decrease with firm size.

Keywords: Labor Demand; Family Firms; Firm Size; Treatment Model; Panel Data (search for similar items in EconPapers)
JEL-codes: C21 C23 D22 G32 J23 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-eur, nep-lma and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:imbwps:92

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