Employment Growth Rates Research Articles

Do bank failures still matter in affecting regional economic activity?

Using a panel dataset covering all 50 states and the District of Columbia for 1984–2014, this study examines the consequences of commercial bank failures on the regional economy. Employing both single-equation panel estimations as well as panel VAR models, I find credit crunch and bank-business relationship channels to be operative at the state-level. Although the deleterious effect of bank failures is found on different measures of regional economic activity including industry-specific labor and goods markets, it is most pronounced on construction-sector employment and GDP growth rates. The findings imply when credit flows are disrupted, potential borrowers like construction companies and building contractors may not be able to secure funds to undertake investment activities, leading to a decline in employment and output growth. The results call for constant monitoring of banks by banking regulatory authorities and identifying early warning signals of bank failures to mitigate their potential real sector losses.

Trade Orientation of Industries and Employment Performance in Indian Manufacturing: Recent Trends, Patterns and Implications

This paper explores employment trends and patterns differently based on the industry’s trade orientation. These employment patterns cover two disadvantaged categories of workers viz., women vis-à-vis men, contract vis-à-vis regular workers. The results suggest that a low trade dependent industry has more employment opportunities for women workers. In comparisons of employment opportunities between women and men workers, a high level of employment disparity is found. Similarly, gap between regular and contract workers have widened after the trade liberalisation. It is found that major industry groups have revealed slightly increasing employment growth during the 1989-1990 to 1999-2000. In the period from 2000-01 to 2005-06, employment growth rates declined by more than two times in Indian manufacturing. This study also finds that employment has reported highest growth in import competing industries; whereas export oriented industries have also reported positive but marginal growth.

Fracking, Drilling, and Asset Pricing: Estimating the Economic Benefits of the Shale Revolution

We quantify the effect of a significant technological innovation, shale oil development, on asset prices. Using stock returns on major news announcement days allows us to link aggregate stock price fluctuations to shale technology innovations. We exploit cross-sectional variation in industry portfolio returns on days of major shale oil-related news announcements to construct a shale mimicking portfolio. This portfolio can explain a significant amount of variation in aggregate stock market returns, but only during the time period of shale oil development, which begins in 2012. Our estimates imply that $3.5 trillion of the increase in aggregate U.S. equity market capitalization since 2012 can be explained by this mimicking portfolio. Similar portfolios based on major monetary policy announcements do not explain the positive market returns over this period. We also show that exposure to shale oil technology has significant explanatory power for the cross-section of employment growth rates of U.S. industries over this period.

Projecting the Impact of Population Aging on the Quebec Labour Market

Quebecers are living longer than ever before as a result of better health as well as improved educational attainment and economic well-being. Using a dynamic microsimulation model, we show that an aging workforce will not necessarily mean a decline in Quebec employment levels in the coming years. Because future experienced workers will be more educated and more of them will remain in employment for longer, we project that annual growth rates in employment will stay positive, averaging between 0.2 and 0.3 percent over the next two decades. Between 2035 and 2050, employment could contribute nearly 0.3 percentage points to annual economic growth in Quebec.

THE IMPACTS OF CORRUPTION ON FIRM PERFORMANCE: SOME LESSONS FROM 40 AFRICAN COUNTRIES

The current evidence-base regarding the impacts of corruption on firm performance is based largely on studies of individual countries and contains mixed results. Therefore, the aim of this paper is to achieve a better insight into this relationship by reporting the results of a firm-level analysis of the impacts of corruption on firm performance using World Bank Enterprise Survey (WBES) data across 40 African countries. The clear result is that corruption significantly enhances rather than harms annual sales, employment and productivity growth rates. The outcome is to re-theorize participation in acts of corruption as beneficial for the individual firms engaged in such activity, while recognizing the wider evidence that this is not an optimal strategy at the aggregate country level. The outcome will be to advance knowledge about how corruption needs to be tackled. To eliminate corruption, it is shown here to be necessary for public authorities to recognize that corruption is an efficient strategy at the firm level and to adopt measures to alter the cost/benefit ratio confronting individual enterprises, and at the same time, to address the country-level formal institutional deficiencies that characterize many developing countries and result in the prevalence of corruption.

Private Equity Targets and Post Investment Performance: A Study of the Corporate Sector in the North and Regions

This report contributes to policy efforts to transform Northern growth, rebalance the UK economy and establish the North as a global powerhouse. • We utilise a unique corporate level database covering the period 1998-present to analyse the characteristics of the corporate sector in the North of England with a view to identifying the size and nature of the potential target market for growth finance through mid-market private equity (PE) investments. For this purpose we focus on companies within the size band of £5-£15m in assets and/or turnovers in the £5m plus range across all industry sectors. • For purposes of this report, the North is defined as comprising the North East, North West, Yorkshire and Humberside, East and West Midlands government standard regions. The North consistently has around a third (32.5%) of the total number of active companies throughout the whole period 1998-2013. • Recent analysis by the Centre for Management Buyout Research (Imperial College Business School) shows an increase in the number of private equity backed buyout deals in the period since 2012 with the Northern regions showing most activity outside London and the South East. We estimate that the Northern regions have 44% of the stock of PE invested firms in 2013. In 2015 81 deals worth £5.5bn were completed in the Northern regions representing 38.0% by number of deals and 27.1% by value of total private equity portfolio investment last year. • Our data set is utilised to profile the characteristics of private equity targets and identify potential targets in the Northern regions. The profiling of private equity targets, using a multivariate technique that assesses all firm level characteristics simultaneously, generates a range of significant characteristics. Private equity targets tend to be established companies in terms of age and size and are more likely to have a higher proportion of tangible assets. The targets are in stable industry sectors with a lower than average failure rate and are less likely to be diversified (single product). Amongst the riskier sectors private equity investors have a preference for advanced manufacturing technologies and the high technology end of the services sector. The firms that private equity investors target are generally cash generative, profitable and have high interest coverage ratios on existing debt. The target firms are likely to have borrowed and have charges on assets. These firms have lower levels of equity and lower than average productivity thus providing opportunities for investors to realise performance improvement, and growth, post investment. • The model identifies a total of around 1187 potential prime private equity targets in the Northern Regions that represents 36% of the total identified targets.• Depending on whether analyses include full accounts with or without the productivity determinant, or are based on the full sample estimation and the 2009-2013 sub-samples, we find that the number of medium sized PE targets in the Northern regions ranges from 689 to 293, and the number of large PE targets ranges from 1399 to 794.• We model firm level productivity using a multivariate technique that isolates the efficiency differences in firms attributed to technological progress, knowledge and know-how, management practices and other factors that increase efficiency (i.e. total factor productivity (TFP)). We find a positive productivity differential of PE backed firms over the control group of companies of around 5.1% throughout the whole period, which is stronger in the pre-recession period (around 6.4%). The differential is around 4.1% above the control sample, in the recession and post-recession period. The models are re-estimated on the subsample of firms in the northern regions and reveal a stronger relative performance of private equity portfolio companies relative to the control sample (7.5% to 9.1%) with a particularly strong performance in the more recent period. • We find a positive profitability differential for PE over other company types of between 2.0% and 3.5%. The differential is higher in the recession period and strongly significant. The results hold for the models estimated using the northern region subsample of firms only.• We find a rolling three-year compound annual growth rate (CAGR) in employment of around 3%, showing that achieved productivity improvements are not at the expense of employment. Private equity portfolio companies appear to be particularly resilient in the recession period. We find no significant differences of growth rates for firms in the Northern region compared to the PE invested population.

BUSINESS REGISTRATION AND FIRM PERFORMANCE: SOME LESSONS FROM INDIA

The aim of this paper is to evaluate the impacts on future firm performance of a firm deciding to register from the outset of its operations. Until now, the assumption has been that starting up registered is linked to higher future firm performance. Reporting World Bank Enterprise Survey (WBES) data collected in 2014 on 9,281 formal enterprises in India, and controlling for other determinants of firm performance as well as the endogeneity of the registration decision, the finding is that formal enterprises that start up unregistered and spend longer unregistered have significantly higher subsequent annual sales and employment growth rates compared with those registered from the outset. When the number of years spent unregistered is included, there are also productivity gains from delaying registration. The tentative explanation is that in this weak institutional environment, the advantages of registering from the outset are outweighed by the benefits of deferring registration. Evaluating the policy implications, the argument is that there is a need to shift away from the conventional eradication approach toward unregistered startups based on the assumption they are unproductive, and toward a more facilitating approach that improves the benefits of being registered and tackles the systemic formal institutional deficiencies that lead entrepreneurs to delay their decision to register.

Higher Education Institutions and Regional Growth: The Case of New Zealand

We examine the relationship between the presence of Higher Education Institutions (HEIs) and local growth, using a sample of 57 New Zealand Territorial Local Authorities (TLAs) between 1986 and 2013. Our models include a large set of controls, including past growth. An innovation of our approach is that we include official population projections as a control to account for growth-related factors that were perceived at the time by policy makers, but are otherwise unobservable to the econometrician. Holding all else equal, we find that a greater university share of Equivalent Full Time Students (EFTS) to working-age population raises population and employment growth. At the means, a one percentage point increase in university EFTS share is associated with a 0.19 (0.14) percentage point increase in the annual average population (employment) growth rate. This relationship holds under all alternative specifications, including different HEI activity definitions, samples, and specifications. On the other hand, growth related to polytechnic activity was estimated less precisely, and is much smaller. While our results suggest a positive association between university activity and growth, we find no evidence for complementarities between HEI activity and several indicators of urbanisation and innovation, nor do we find evidence that HEI presence affected the industrial (sectoral) structure of the local economy.

Zombie Firms and the Crowding-Out of Private Investment in China

From a data set of Chinese firms in the 2005–07 period, we find that government investment boosted the performance of zombie firms and crowded out the growth of private firms; we also found that the higher the concentration of state banks (and of state-owned enterprises), the more conducive is the environment for nurturing zombie firms. With the exit of zombie firms, (a) the industrial output growth rate would be higher by 2.12 percentage points, (b) the capital accumulation rate would be higher by 1.4 percentage points, (c) the employment growth rate would be higher by 0.84 percentage points, and (d) the rate total factor productivity growth would be higher by 1.06 percentage points. Our results support a radical change in the way that government investment has been carried out, and support comprehensive reform of the state sector, but they do not necessarily argue against government investment in large infrastructure projects and strategically-critical areas.

Do Women Lag Behind Men? A Matched-Sample Analysis of the Dynamics of Gender Gaps

Previous studies found mixed answers whether women-owned firms are less successful than men-owned firms. Women entrepreneurs may lag behind men because they tend to have less human capital, they may have different personal preferences toward their businesses, and they tend to choose highly competitive services and retail sectors. This comprehensive study builds upon previous researches to examine gender gaps in survival, business outcomes, growth rates and financial capital injections. We used a matched sample of 430 pairs of a woman-owned and a man-owned firms with the same human capital (measured by age, education, experience, and race), the same preferences (measured by weekly hours worked and whether they have home-based business or not) and in the same industrial clusters (high-tech, medium-tech, and non-tech). We used a confidential version of Kauffman Firm Survey, eight years of panel data of new firms that started in 2004. We found that a woman–owned firms have the same survival rate as a man-owned firms. Women start their firms with smaller assets and fewer employees and generate lower sales but earn same profit as men. Despite this fact, their growth rates of total assets, sales, profits and employment are same as their male-owned counterparts. We found no gender gaps in debt capital injection ratios. However, we found women use more equity capital and less trade finance as a percentage of total financing than men. Our findings suggest that women do not lag behind men but they manage a smaller firms. Our analysis of the size gap indicates that about half of the size gap is explained by differences in industry and the remaining half is unexplained, which needs to be explored more in detail in the future.

Impact of clusters on regional economic performance

Purpose – This paper aims to examine the methodology used to identify clusters on the one hand and assess the economic impact that those may have on regions on the other hand. Design/methodology/approach – The influential work on “clusters”lead by Michael Porter since the 1990s has become a tool for promoting innovation and growth at national and regional level. Even if the theory has become very popular, a few empirical investigations were conducted since. In a recent study, Delgado, Porter and Stern developed a model to investigate the impact of cluster composition on the performance of regions in the USA. They find strong evidence that industries operating in a strong cluster environment perform better. The aim of this study is to improve the methodology used in evaluating the cluster environment and then to replicate their model and apply it to a highly competitive industry in Switzerland, namely, the precision goods sector. It enables to look closely at the importance of the microeconomic environment surrounding an industry at the regional level. Findings – In Switzerland, the precision industry forms a traded cluster in three different regions. The model then reveals that those regions perform better. The results show that industries located in or nearby regions with a strong cluster environment experience higher employment growth rates. Originality/value – It highlights the importance of the microeconomic environment even in small competitive countries.

Net Employment Growth by Firm Size and Age in Italy

We study how net employment growth rates differ by firm age and size. For this purpose, we exploit a long panel dataset collecting information for all Italian private firms with at least one employee. We find that firm size is not a crucial determinant of firm growth, once age is controlled for. Firms in their early years of life (up to 3 years) display higher growth rates and slightly higher exit rates than older firms. This up-or-out dynamic of Italian firms seem subdued if compared with the US, the other country for which a similar analysis is available. We also exploit the long time series to identify which types of firms are hit the most during economic downturns. Results show that older firms reduce net employment growth the most. The impact on younger firms seem partially cushioned by stronger selection at entry. Conditional on age, size turns out not to be significantly correlated with the drop in net employment growth rates during downturns.

Where has all the skewness gone? The decline in high-growth (young) firms in the U.S.

The pace of business dynamism and entrepreneurship in the U.S. has declined over recent decades. We show that the character of that decline changed around 2000. Since 2000 the decline in dynamism and entrepreneurship has been accompanied by a decline in high-growth young firms. Prior research has shown that the sustained contribution of business startups to job creation stems from a relatively small fraction of high-growth young firms. The presence of these high-growth young firms contributes to a highly (positively) skewed firm growth rate distribution. In 1999, a firm at the 90th percentile of the employment growth rate distribution grew about 31 percent faster than the median firm. Moreover, the 90−50 differential was 16 percent larger than the 50−10 differential reflecting the positive skewness of the employment growth rate distribution. We show that the shape of the firm employment growth distribution changes substantially in the post-2000 period. By 2007, the 90−50 differential was only 4 percent larger than the 50−10, and it continued to exhibit a trend decline through 2011. The overall decline reflects a sharp drop in the 90th percentile of the growth rate distribution accounted for by the declining share of young firms and the declining propensity for young firms to be high-growth firms.

Zombie Firms and the Crowding-Out of Private Investment in China

From a dataset of Chinese firms in the 2005-07 period, we find that government investment boosted the performance of zombie firms and crowded out the growth of private firms; and that the higher the concentration of state banks, and of SOEs, the more conducive is the environment for nurturing zombie firms. With the exit of zombie firms, (a) the industrial output growth rate would be higher by 2.12 percentage points, (b) the capital accumulation rate by 1.4 percentage points, (c) the employment growth rate by 0.84 percentage points, and (d) the rate total factor productivity growth by 1.06 percentage point. Our results support a radical change in the way that government investment has been carried out, and support comprehensive reform of the state sector, but they do not necessarily argue against government investment in large infrastructure projects and strategically-critical areas.

Exploring the Role of Location in Dynamics of the Birth and Death of Business Establishments: Case Study Analysis of Santa Barbara County, California

Integrated models of land use and transportation are aimed at addressing regional issues related to congestion, mobility, and economic competitiveness. Integral to these model systems is freight transport, which plays a huge role in the economic vitality of the region in the form of distribution and complex interactions between various stakeholders. Within this context, it is therefore critical to capture and describe accurately the behavioral dynamics of these stakeholders (or firms) in the region, including modeling various life-cycle stages, such as birth, death, growth and decline, and migration patterns. This study focused on dynamics of the birth and death of firms by considering as determinants their internal attributes (size, age, and growth) and external attributes, such as market area characteristics, agglomeration economies, transportation access, and network centrality indexes describing advantage, significance, and properties of a location. This microanalysis was based on an assembled panel of all business establishments in Santa Barbara County in California between 1990 and 2010. Empirical results from this study revealed the presence of spatial and temporal heterogeneity in the birth and death of firms. Highly central locations in the region, such as downtown areas, have a higher probability of firm formation, along with a lower likelihood for firm closures. Professional service firms located along major local and collector roads have higher probabilities of survival. In addition, for their economic survival, retail trade firms favor access to locations along roadways that serve as pass-through connectors in the region. Results also suggest that events of birth and death are triggered primarily by changes in firm internal attributes, such as employment size, revenues, and growth rates.

Does the employment growth rate depend on the local context? An analysis of French industrial establishments over the 2004-2010 period

Ce texte cherche à éclairer la relation entre les performances des entreprises et le contexte local. Cette question est traitée d’un point de vue empirique à partir de l’étude du taux de croissance de l’emploi d’établissements français de l’industrie manufacturière localisés dans les 304 zones d’emploi métropolitaines, division territoriale cohérente d’un point de vue économique. En utilisant un panel de 149 929 établissements au cours de la période 2004-2010 nous estimons différents modèles de croissance comprenant des variables locales en contrôlant des caractéristiques individuelles des établissements. Les résultats confirment l’influence de l’environnement économique sur la création d’emplois et, tout particulièrement du taux de chômage, des effets d’agglomération et des compétences. Les tests de robustesse réalisés sur des sous-ensembles montrent toutefois que le profil des zones d’emploi ou du marché (strictement local ou plus étendu) peut significativement affecter l’intensité du lien entre la firme et son environnement.

Piketty’s Inequality between the Profit and Growth Rates and Its Implications for the Reproduction of Economic Elites

This paper studies, within a growth model, some effects of the inequality between the profit and growth rates on the reproduction of economic elites. To this end, it considers as functions of the capital/income ratio the relations between, on the one hand, the economic growth rate and, on the other hand, the growth rates of capital and of national income. Based on this, it shows that when the income of a particular socio-economic stratum increases with respect to the national income, the lower limit for the growth rate of the first income depends almost exclusively on the variations of the capital/income ratio and of the average productivity of labor, while the employment growth rate plays a secondary role. Moreover, the paper distinguishes between three categories of renter and establishes sufficient conditions for the reproduction of each one of them. It points out that the third category, which comprises those renter dynasties whose share in the national capital stock increases with each generation, constitutes a quasi-feudal development within capitalist societies.

Where Has All the Skewness Gone? The Decline in High-Growth (Young) Firms in the U.S.

The pace of business dynamism and entrepreneurship in the U.S. has declined over recent decades. We show that the character of that decline changed around 2000. Since 2000 the decline in dynamism and entrepreneurship has been accompanied by a decline in high-growth young firms. Prior research has shown that the sustained contribution of business startups to job creation stems from a relatively small fraction of high-growth young firms. The presence of these high-growth young firms contributes to a highly (positively) skewed firm growth rate distribution. In 1999, a firm at the 90th percentile of the employment growth rate distribution grew about 31 percent faster than the median firm. Moreover, the 90-50 differential was 16 percent larger than the 50-10 differential reflecting the positive skewness of the employment growth rate distribution. We show that the shape of the firm employment growth distribution changes substantially in the post-2000 period. By 2007, the 90-50 differential was only 4 percent larger than the 50-10, and it continued to exhibit a trend decline through 2011. The overall decline reflects a sharp drop in the 90th percentile of the growth rate distribution accounted for by the declining share of young firms and the declining propensity for young firms to be high-growth firms.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

퍼지 다기준 의사결정법을 이용한 기업의 일자리 창출 평가지표의 가중치 도출

본 논문은 기업의 일자리 창출 평가체계 개발을 위한 평가항목 선정과 각 평가항목의 가중치를 구함으로써 정부의 기업 일자리 창출 지원과 관련된 정책의 효과를 정량적으로 평가할 수 있는 기초 자료를 제공하고 정책수립의 객관적인 방향을 제시하고자 한다. 이를 위하여 본 연구는 응답자들의 응답에 대한 모호성을 반영하는 퍼지 다지준 의사결정법을 적용한다. 연구결과 고용의 양적 측면과 고용의 질적 측면의 가중치가 비슷하였으며, 세부적으로는 최근 3년간 연간 고용증가율, 연간 순고용규모, 전체 근로자 중 비정규직의 비율, 전체 근로자의 평균고용기간, 전체 근로자의 월평균 임금, 매출액증가율 대비 고용증가율 순으로 가중치가 높은 것으로 나타났다. This paper attempts to select the attributes of job creation and to rank them for evaluation of companies' job creation. And the results of this paper are expected to provide the information for the polices of job creation. In doing so, this paper applies fuzzy decision making analysis that reflects ambiguity and uncertainty in decision-making process. According to the results, the weight of quality of employment is similar with that of quantity of employment. In addition, annual employment growth rate, annual net employment are ranked as first and the percentage of irregular employment, the average length of employment of all workers, average monthly wages of all workers, and employment growth over sales growth rate are next ranked.

Micro Small Medium Enterprises India 1980-2005

In India quite contrary to earlier Censuses the growth of rural enterprises for 1998-2005 witnessed a much higher growth (5.4% p.a) than the urban enterprises (3.7% p.a). This is an interesting finding which suggests that there is a shift towards growth of rural non-farm enterprises as against only urban centered growth witnessed in earlier pre 1998 Economic Censuses, a much awaited shift from a long time. It would also have implications on positive changes in rural incomes and reduction in outmigration of population due to distress induced elements. This finding needs to be corroborated with further studies to find the overall impact of growth of rural enterprises on people living in rural areas. Compared to previous censuses of 1980-1990 and 1990-98 both agriculture and especially non-agriculture enterprises witnessed a higher growth by 2005 Census. Another interesting finding is that among the rural enterprises the growth of establishments was much higher (8.8 % p.a) than OAE enterprises (4.2% p.a) between1998-2005. Whereas in earlier Censuses of 1980-1990 and 1990-98 establishments (employing larger wage workers along with larger investment and value addition) had always higher growth than the OAE (own account family run small enterprises).Establishments also witnessed a higher growth in urban enterprises. There is a need to investigate what kind of establishments are emerging and what type of OAEs are on a decline to get a complete clear picture of enterprise transformation in the rural areas.The growth rate of employment during 1998 to 2005 was of the order of 2.8% per annum (3.9%in rural and 1.7% in urban). This is considerably higher than the growth rate (1.75%) observed during 1990 to 1998. However the growth of workers in the enterprises (2.8% per annum) is much lower than the number of enterprises (4.7 % p.a). Even in establishments where hired workers are used the employment growth is lower. A striking point is the very low percentage shares of women workers as compared to men in the enterprises especially in urban areas.It is regrettable to look at rural diversification being concentrated only in one major activity i.e Farming of Animals. There is tremendous need to diversify the agricultural enterprises from simple animal husbandry to other activities such as agro-processing enterprises having higher value addition; processing of cereals, pulses, oilseeds and other cash crops, agro-processing and agro-services (spraying, tractor operation, repairs).Coming to the growth of the enterprises it is the communications (15.8% p.a) followed by Finance and real estate (9.6% p.a), Transport storage and ware housing (6.4% p.a), Manufacturing (6.0 % p.a), Retail Trade ( 4.9% p.a), RestaurantsH however it does not correspond to their proportion in total population SC (19.7%) / ST (8.5%). There is also need for inclusive policy intervention by the State.In correlation and regression analysis Agriculture enterprises do not have any correlation to any of the independent enterprises. For non-agriculture enterprises only Literacy, Electricity and Per-capita State Gross domestic Product (Lnnagri) are significantly correlated. Many other variables like poverty irrigation etc. were not significantly correlated with the dependent variable.