Assessing Determinants on Job Creation at the Firm Level: Swedish Micro Firm Data

Abstract

This study analyses job-creation determinants at the firm level for a panel of Swedish micro firms across four industry sectors, using the GMM (Generalized Method of Moments) system to analyse a database consisting of 12532 Swedish micro firms during 2007. It was found that the firms' size and age, the importance of debt financing and increased availability of liquidity are positively related to job creation as well as industry affiliation. Finally, the results suggest that a resource-based approach is at work in explaining job creation in micro firms. Unlike the majority of previous studies, this study is characterized by being based on a large and cross-sectoral firm-level dataset, testing a number of hypotheses driven from the resource-based approach. The present study contributes to the literature on the determinants of employment at the firm level as it investigates the importance of liquidity and financial leverage to firm labour demand dynamics in Sweden.

Gross Job-Creation and Gross Job-Destruction Determinants: Empirical Analyse at Micro Firms Data Level

“…This is indeed in line with the conclusions of Yazdanfar and Salman [3], when studying Malaysian firms. They concluded that to remain economically competitive, firms need to invest constantly so that they can generate and establish new sources for economic growth.…”

“…On the other hand, job -destruction is the opposite of job creation. Thus, it exists whenever we observe changes in employment that are assumed by the total number of firms that contract their businesses or exit the market in a given period [3][4][5]. From this perspective, we were able to infer that all businesses that do not expand or contract during a given moment will not influence any employment increase or decrease.…”

“…Lawless, Yazdanfar, and Salman and Davis et al [2][3][4] defined net employment as a change in job creation minus job destruction. While the employment rate is the difference between the job creation rate and the job destruction rate.…”

“…From the resource's based approach methods perspective point of view, firms can achieve their optimum performance level through several different types of paths. As a matter of fact, Yazdanfar and Salman [3] mentioned various performance measures that firms can use to achieve their optimum performance level. Similarly to this measurement method, one can recur to the analysis of profitability, variations in sales (or changes in sales) and job-creation, as well as one, can recur to other available resources.…”

“…To achieve this goal, this article seeks to analyses if firm's size, tenure measured as the workers' experience, liquidity availability, financial leverage, asset tangibility, and profits impact positively or negatively on employment as it was found by Lawless [2] when studying Ireland firms, recurring to microdata from this country's Central Bank and Davis et al [1] when measured size and worker age, in terms of experience impact in the gross job-creation and destruction. We also intend to see if industry affiliation is positively related with gross job-creation and gross job-destruction as it is pointed out by Yazdanfar and Salman [3], when studying Swedish micro firms. To achieve this goal, Ordinary Least Square Dummy Variable, Fixed Effect, and Random Effect econometric methods are ЭН зарубежный опыт applied to regress the models with the main object of investigating whether Portuguese micro-firms behave similarly or if they display different patterns.…”