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Dynamics of Firm-level Job Flows in Slovenia, 1996–2011

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Abstract

Firm-level employment changes were associated with simultaneous high rates of gross job creation, destruction, and reallocation. These job flows primarily reflected persistent firm-level employment changes. There was considerable variation in job flow rates across sectors. Sectors that created more jobs also destroyed more jobs. Job destruction was more volatile than job creation. Relative volatility was negatively related to net employment growth. Sectoral and aggregate economy-wide shocks exerted considerable influence on variations in job creation and destruction rates. However, idiosyncratic factors were also important. Passive learning about initial conditions explained a small, but significant, fraction of job reallocation.

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Notes

  1. See Davis and Haltiwanger (1999), Haltiwanger et al. (2003), and OECD (2009a) for a review of the literature and summary of the findings.

  2. In the report of the European Central Bank (2012), the analysis of worker flows does not include Belgium, Germany, and Luxembourg because of non-availability of data. For data-related reason, the discussion of gross job flows is limited to only Belgium and Portugal.

  3. Estimates of employment consistent with the measurement framework of national accounts are typically compiled from labor force surveys, business surveys, and micro data sets such as social security statistics and tax registers. Depending on the primary data source, a variety of adjustments are made to the original numbers to satisfy the requirements of the System of National Accounts.

  4. As such, these findings may seem contrary to the findings of Vodopivec (2004). He found a declining trend in both job creation and job destruction rates during 1996–2001, with job creation rates being higher than job destruction rates. However, as alluded to in the section ‘The Data’, a likely explanation of the difference in findings is that, unlike in this paper, Vodopivec’s measure of job creation and destruction rates was not based on FTE employment but on head-count employment that included part-time workers.

  5. Following Davis and Haltiwanger (1992), we use net employment growth as a measure of the business cycle.

  6. See footnote 13 on page 837 in Davis and Haltiwanger (1992) for the calculation of persistence rates. As Davis and Haltiwanger (1999, p. 2727) point out, the focus in this measure of persistence is on the persistence of the typical newly created or newly destroyed job. This focus is distinct from a focus on the persistence of the typical existing job or the persistence of firm size.

  7. From a statistical perspective, equals the size-weighted average absolute deviation of firm growth rates around the overall and sectoral means.

  8. Konings (1995) found a pro-cyclical pattern in the nature of job turnover in the manufacturing sector in the United Kingdom: in good times jobs were reallocated more within-sector, while in bad times jobs were reallocated more between-sector.

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Acknowledgements

The authors thank Damjan Kozamernik, Urban Sila, Milan Vodopivec, Paul Wachtel, the seminar participants, and an anonymous referee for helpful comments. This paper was initiated when Biswajit Banerjee was visiting the Analysis and Research Department of the Bank of Slovenia. An earlier version of the paper was presented at a seminar at the Bank of Slovenia.

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  1. Haverford College, 370 Lancaster Avenue, Haverford, 19041, PA, USA

    Biswajit Banerjee

  2. Bank of Slovenia, Slovenska 35, Slovenia, 1505, Ljubljana

    Manca Jesenko

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  1. Biswajit Banerjee
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  2. Manca Jesenko
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Banerjee, B., Jesenko, M. Dynamics of Firm-level Job Flows in Slovenia, 1996–2011. Comp Econ Stud 56, 77–109 (2014). https://doi.org/10.1057/ces.2013.30

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