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The effect of the Great Recession on the employment growth of young vs. small firms in the Eurozone

Andrea Mina and Pietro Santoleri

Structural Change and Economic Dynamics, 2021, vol. 56, issue C, 184-194

Abstract: This paper examines the uneven impact of the Great Recession on firm-level employment growth across firm size and age classes. Based on firm-level data from ten Eurozone countries, we show that, notwithstanding the negative impact of the crisis, young firms were the most dynamic group of firms and prime contributors to net job creation even during the recession. However, conditional on survival, young firms experienced a sharp drop in their employment growth rates, whereas small firms were mostly unaffected. By using industry-level measures of external financial dependence, we then show how financial frictions were a driver of the growth rates slowdown of young firms.

Keywords: Great Recession; Employment growth; SMEs; Young firms; Financial constraints (search for similar items in EconPapers)
JEL-codes: D22 G01 L25 M13 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.strueco.2020.11.002

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