The direct employment effects of new businesses in Germany revisited: an empirical investigation for 1976–2004

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractBased on an improved and extended database, the Establishment History Panel, we extend the analysis of Fritsch & Weyh (2006) by investigating the development of employment in German start-up cohorts for the period 1976 to 2004. We confirm the typical pattern of an initial increasing and then soon decreasing number of employees in start-up cohorts. Furthermore, we provide some of the first evidence for the "liability of aging" phenomena in Germany. Older firms face a relatively high risk of failure. Although only the largest 25% of the surviving entries grow in terms of employment, after 25 years the number of employees in these relatively large businesses strongly declines.JEL-Classification: D21, L10, L26, L29, M13

New Business Formation and Regional Development: A Survey and Assessment of the Evidence

“…It is a common observation of such cohort studies that only a small proportion of the new businesses create a considerable number of jobs; the vast majority remains rather small. 6 Accordingly, Schindele and Weyh (2011) find that after 10 years, about 23 percent of the jobs are concentrated in the largest 1 percent of the initial start-ups, 45 percent of employment is in the largest 5 percent, and more than 82 percent of the employees work for the largest 25 percent of the initial start-ups.…”

The Economic Contribution of Start-Up Firms in Germany

“…Such firms are shown to be important because they generate a significant number of new jobs (Storey, 1994). However, the pure focus on fast-growing enterprises in terms of employment in the short run is myopic, as Fritsch and Weyh (2006) or Schindele and Weyh (2011) find that entrepreneurs in (West) Germany initially increase the number of employees, which is later followed by a decrease in the number of employees. Fritsch and Weyh (2006, p. 256) conclude that "strong employment growth of start-up cohorts is definitely not a general trend."…”

“…The decline of employment in later years might not necessarily be due to reorganization and optimization of different 1 April, 4 2014: http://www.existenzgruender.de/englisch/index.php 2 April, 4 2014: http://www.whitehouse.gov/startup-america-fact-sheet processes. In fact, Schindele and Weyh (2011) suggest that older firms face a comparatively high risk of failure.…”

Does Quality Make a Difference? Employment Effects of High- and Low-Quality Start-Ups

“…This general pattern, however, varies greatly between sectors. The number of employees in cohorts of manufacturing start-ups becomes larger and remains above the initial employment level for a longer period of time than is the case in services (Fritsch and Weyh, 2006;Schindele and Weyh, 2011).…”