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The effect of the Great Recession on the employment growth of young vs. small firms in the Eurozone

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  • Mina, Andrea
  • Santoleri, Pietro

Abstract

This paper examines the uneven impact of the Great Recession on firm-level employment growth across firm size and age classes. Based on firm-level data from ten Eurozone countries, we show that, notwithstanding the negative impact of the crisis, young firms were the most dynamic group of firms and prime contributors to net job creation even during the recession. However, conditional on survival, young firms experienced a sharp drop in their employment growth rates, whereas small firms were mostly unaffected. By using industry-level measures of external financial dependence, we then show how financial frictions were a driver of the growth rates slowdown of young firms.

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  • Mina, Andrea & Santoleri, Pietro, 2021. "The effect of the Great Recession on the employment growth of young vs. small firms in the Eurozone," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 184-194.
    • Handle: RePEc:eee:streco:v:56:y:2021:i:c:p:184-194
    DOI: 10.1016/j.strueco.2020.11.002
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    3. Lalinsky, Tibor & Meriküll, Jaanika & Lopez-Garcia, Paloma, 2024. "Productivity-enhancing reallocation during the Covid-19 pandemic," Working Paper Series 2947, European Central Bank.
    4. Miller, Jason W. & Phares, Jonathan & Burks, Stephen V., 2023. "Job Creation and Job Destruction Dynamics in the U.S. Truck Transportation Industry, 1995-2019," IZA Discussion Papers 16184, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    Great Recession; Employment growth; SMEs; Young firms; Financial constraints;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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