The Contribution of Etablishment Death and Births to Employment Growth essays

The Contribution of Etablishment Death and Births to Employment Growth essays The relatively recent development of longitudinal establishment datasets has generated quite a bit of excitement in both the academic and the statistical communities. From this literature, we have learned that there is a large amount of volatility at the individual establishment level that underlies the smooth time series of aggregate employment growth. The descriptive statistics coming out of this literature have not only stimulated the review and updating of existing labor market theories, but have also stimulated the U.S. statistical agencies to develop their administrative datasets in such a way so as to produce longitudinal job flow statistics. The purpose of this paper is to use a new longitudinal database from the Bureau of Labor Statistics (BLS) in order to examine how establishment births and deaths contribute to job creation, job destruction, and net employment growth at different frequencies of measurement. Despite all that we have learned about the labor market from the existing job flows literature, the conclusions that can be drawn from these studies are somewhat limited. First, almost all of the existing work using U.S. data has been restricted to the manufacturing sector. Recent work by several authors has illustrated how job creation and job destruction in manufacturing may not be representative of the entire U.S. economy. A second limitation is that most of the existing empirical work on job flows, either by choice or by necessity, is based upon data that excludes the Since most establishment births and deaths are quite small, at least in the short run, we are thus unsure how these births and deaths influence employment growth. While data that focuses on large establishments will cover most employment, an analysis of job flows depends on the magnitude of employment flows at continuing establishments relative to the ...