Job flows in chile

This paper is devoted to the construction of the panel and econometric use of the first labor panel database to study workplace creation and destruction in Chile. For local interest, the main feature of the paper is that it is the first time that representative and consistent series of creation and destruction are made available for the Chilean economy. For general interest, the main feature of the paper is the estimation of the economic relevance of workplace fragility in different sizes of firms. Once we control for sector and date dummies as well as for the characteristics of workers it seems clear that small firms are much more likely to destroy jobs and less likely to create them. The steady state of jobs in smaller firms, it seems, is generated by the mechanics of firm creation in the economy: new firms have to start small. But, controlling for that, the jobs and workplaces in these firms are more fragile. We also take advantage on a question on job destruction of the survey to show that small firms are more likely to go bankrupt and we show how this differential effect significantly increased after the Asian Crisis. We characterize the geographic and sector identity of the most fragile workplaces. We find them to be in the construction, commerce and services sectors and hence mainly in highly urbanized regions of the country. This emphasizes the importance (maybe even beyond the Chilean experience) of looking at fragility in sector representative databases.