Hiring opportunities for new firms and the business cycle

Udo Brixy () and Martin Murmann ()
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Udo Brixy: Institute for Employment Research (IAB)
Martin Murmann: Bern University of Applied Sciences

Small Business Economics, 2025, vol. 64, issue 3, No 20, 1387-1413

Abstract: Abstract Whether firms founded during or outside economic crises have greater growth potential is an important question for both prospective entrepreneurs and policy makers. Existing research offers conflicting answers, and mostly either focuses on aggregate cohort-level effects or selectively excludes small new firms from the analyses. Using extensive linked employer-employee data on young German firms around and during the Global Financial Crisis, a period of sharply reduced access to external capital and recession, we show that young firms respond to cyclical conditions in highly heterogeneous ways. Our firm-level results reveal that the average new firm found it easier to hire its first employees when it was founded during the crisis. These firms achieved countercyclical growth by hiring career entrants. More specifically, hiring in very young (

Keywords: Firm growth; Hiring; Entrepreneurship; Business cycle; Global Financial Crisis (search for similar items in EconPapers)
JEL-codes: D22 E32 J23 L11 L25 L26 M13 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-024-00948-6

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