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The research catalogue is an archive of ESRC-funded grants and outputs. Links, files and other content will no longer be maintained or updated after April 2014.

Structural Models of Individual Wage Dynamics and Matched Employer-Employee Data: Theory, Estimation and Policy Implications.

Grant reference: RES-063-27-0090

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Journal article details

The contribution of large and small employers to job creation in times of high and low unemployment
We document a strong negative correlation, at business cycle frequencies, between the net job creation rate of large firms or establishments and the level of aggregate unemployment, much stronger than for small employers. After detrending, the differential growth rate of employment between initially large and small firms has an unconditional correlation of -.5 with the unemployment rate, and varies by about 5% over the business cycle. We employ a variety of measures of relative employment growth and methodologies to circumvent two statistical fallacies, the Regression and Reclassification biases, that can affect our results. We exploit several (partly novel) datasets from the US, Denmark, and France, both repeated cross-sections and job flows with employer longitudinal information, spanning the last four decades and several business cycles. Our main fact is robust to different treatments of entry and exit of employers, and occurs mostly within, not across, US sectors and states. We discuss implications for theories of factor demand.

Primary contributor

Author Giuseppe Moscarini

Additional contributors

Co-author Fabien Postel-Vinay

Additional details

American Economic Association
01 January 2013
Nashville, TN
American economic review