Job Flows and Establishment Characteristics: Variations Across U.S. Metropolitan Areas

Jason Faberman ()

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This paper addresses the role played within metropolitan areas by heterogeneous agent models of constant churning. The evidence shows positive relationships between job turnover, young establishments, and metropolitan employment growth. Most areas, however, differ in their levels of job creation rather than job destruction. Results persist after controlling for regional differences in industry, but less so when controlling for differences in the establishment age distribution, and are consistent overall with standard models of creative destruction. Evidence from several entering cohorts, however, contradicts the vintage replacement process of creative destruction models. Namely, job destruction decreases as establishments age and there is no clear inverse relation between establishment entry rates and exit ages. These patterns are instead consistent with a turnover process seen in standard models of firm learning. Further evidence suggests that these patterns vary systematically with the overall employment growth of a region. Together, the results suggest that (i) processes of both creative destruction and firm learning may matter for local labor dynamics, but future models will have to reconcile with this new evidence, and (ii) intrinsic local factors, such as the “business climate”, may affect the dynamics of both processes.

Keywords: job turnover; regional and urban growth; creative destruction; firm learning (search for similar items in EconPapers)
JEL-codes: E24 J63 R11 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2003-09-01
New Economics Papers: this item is included in nep-ent, nep-geo, nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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