Who Creates Jobs? Estimating Job Creation Rates at the Firm Level

Peter Huber, Harald Oberhofer and Michael Pfaffermayr

No 435, WIFO Working Papers from WIFO

Abstract: This paper shows that applying simple employment-weighted OLS estimation to Davis – Haltiwanger – Schuh (1996) firm level job creation rates taking the values 2 and –2 for entering and exiting firms, respectively, provides biased and inconsistent parameter estimates. Consequently, we argue that entries and exits should be analysed separately and propose an alternative, consistent estimation procedure assuming that the size of continuing firms follows a lognormal distribution. A small-scale Monte Carlo analysis confirms the analytical results. Using a sample of Austrian firms, we demonstrate that the impact of small firms on net job creation is substantially underestimated when applying employment-weighted OLS estimation.

Keywords: DHS growth rate; Job creation; Monte Carlo simulation; firm age; firm size (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-08
New Economics Papers: this item is included in nep-bec, nep-ecm, nep-ent and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Who Creates Jobs? Estimating Job Creation Rates at the Firm Level (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2012:i:435

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