Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148340
Authors: 
Brixy, Udo
Murmann, Martin
Year of Publication: 
2016
Series/Report no.: 
ZEW Discussion Papers 16-079
Abstract: 
Recent research suggests that employment in young firms is more negatively impacted during economic downturns than employment in incumbent firms. This questions the effectiveness of policies that promote entrepreneurship to fight crises. We complement prior research that is mostly based on aggregate data by analyzing cyclical effects at the firm level. Using new linked employer-employee data on German start-ups we show that under constant human capital of the firms' founders, employment growth in less than 11=2-year-old start-ups reacts countercyclically and employment growth in older start-ups reacts procyclically. The young start-ups realize their countercyclical growth by hiring qualified labor market entrants who might be unable to find employment in incumbent firms during crises. This mechanism is highly important in economic and management terms and has not been revealed by prior research.
Subjects: 
Firm growth
Entrepreneurship
Business cycle
Crisis
JEL: 
E32
J23
L26
M13
L25
L11
D22
Document Type: 
Working Paper

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