Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/285113.2 
Year of Publication: 
2025
Series/Report no.: 
IWH Discussion Papers No. 19/2023
Version Description: 
This version: March 14, 2025
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
We study changes in job reallocation in Europe after 2000 using novel micro- aggregated data that we collected for 19 European countries. In all countries, we document broad-based declines in job reallocation rates that concern most econo- mic sectors and size classes. These declines are mainly driven by dynamics within sectors, size, and age classes rather than by compositional changes. Simultaneously, employment shares of young firms decline. Consistent with US evidence, firms’ em- ployment has become less responsive to productivity shocks. However, the disper- sion of firms’ productivity shocks has decreased too. To enhance our understanding of these patterns, we derive and apply a firm-level framework that relates changes in firms’ market power, labor market imperfections, and production technology to firms’ responsiveness and job reallocation. Using German firm-level data, we find that changes in markups and labor output elasticities, rather than adjustment costs, are key in rationalizing declining responsiveness.
Subjects: 
business dynamism
European cross-country data
job reallocation
market power
productivity
responsiveness of labor demand
technology
JEL: 
D24
D43
J21
J23
J42
L11
L25
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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2 10419/285113.2 This version: March 14, 2025
1 10419/285113 This version: March 7, 2024

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