Identifying Bankruptcies in German Social Security Data
Daniel Fackler, Eva Hank, Steffen Müller, Jens Stegmaier
FDZ-Methodenreport,
No. 10,
2017
Abstract
Many empirical studies about firm exits point out that it is important to distinguish between different types of closures, e.g., voluntary and involuntary liquidations. This report describes how exits due to bankruptcies can be identified in the German Establishment History Panel (BHP). In contrast to other closures, bankruptcies can be unambiguously regarded as indica-tion for economic failure and can therefore be interpreted as involuntary exits.
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09.06.2016 • 22/2016
The German Economy Benefits from Strong Domestic Demand
In 2016, the moderate upswing of the German economy continues. Incomes grow due to the steady expansion in employment, and the fall in energy prices has propped up the purchasing power of private households. As a consequence, private consumption expands healthily; investment in housing is additionally stimulated by very low interest rates. Exports, however, expand only moderately, as the world economy is rather weak. All in all, the IWH forecasts the German GDP to expand by 1.8% in this year and by 1.6% in 2017.
Oliver Holtemöller
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Spinoffs in Germany: Characteristics, Survival, and the Role of their Parents
Daniel Fackler, A. Schmucker, Claus Schnabel
Small Business Economics,
No. 1,
2016
Abstract
Using a 50 % sample of all private sector establishments in Germany, we report that spinoffs are larger, initially employ more skilled and more experienced workers, and pay higher wages than other startups. We investigate whether spinoffs are more likely to survive than other startups, and whether spinoff survival depends on the quality and size of their parent companies, as suggested in some of the theoretical and empirical literature. Our estimated survival models confirm that spinoffs are generally less likely to exit than other startups. We also distinguish between pulled spinoffs, where the parent company continues after they are founded, and pushed spinoffs, where the parent company stops operations. Our results indicate that in western and eastern Germany and in all sectors investigated, pulled spinoffs have a higher probability of survival than pushed spinoffs. Concerning the parent connection, we find that intra-industry spinoffs and spinoffs emerging from better-performing or smaller parent companies are generally less likely to exit.
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Firm Exit and Job Displacement – ein Workshopbericht
Daniel Fackler
Wirtschaft im Wandel,
No. 4,
2015
Abstract
Die Abteilung Strukturwandel und Produktivität des IWH veranstaltete am 17. und 18. Juli 2015 einen Workshop zum Thema „Firm Exit and Job Displacement“. Dabei trafen sich hochkarätige Forscher (u. a. von der University of California Berkeley und der Harvard University) aus zahlreichen Ländern, um aktuelle Arbeiten zu Themen wie Unternehmenswachstum und Beschäftigungsstabilität zu diskutieren. Kernthema des Workshops war jedoch die aktuelle Forschung zu den Folgen unfreiwilliger Arbeitsplatzverluste (job displacement).
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The Schumpeterian Growth Paradigm
Philippe Aghion, Ufuk Akcigit, Peter Howitt
Annual Review of Economics,
2015
Abstract
In this review, we argue that the Schumpeterian growth paradigm, which models growth as resulting from innovations involving creative destruction, sheds light on several aspects of the growth process that cannot be properly addressed by alternative theories. We focus on three important aspects for which Schumpeterian growth theory delivers predictions that distinguish it from other growth models, namely, (a) the role of competition and market structure, (b) firm dynamics, and (c) the relationship between growth and development.
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06.07.2015 • 27/2015
Rejection of Reforms as a Chance for Reforms
The President of the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association continues to see a chance for an agreement between the European Union (EU) and Greece. On the surface, Grexit looks now more likely than ever. But the resignation of Yanis Varoufakis, Minister of Finance, and the outcome of the referendum may also provide a chance for the Greek government to agree on reforms and save face. But the window of opportunity is closing very fast.
Reint E. Gropp
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Public Bank Guarantees and Allocative Efficiency
Reint E. Gropp, Andre Guettler, Vahid Saadi
Abstract
In the wake of the recent financial crisis, many governments extended public guarantees to banks. We take advantage of a natural experiment, in which long-standing public guarantees were removed for a set of German banks following a lawsuit, to identify the real effects of these guarantees on the allocation of credit (“allocative efficiency”). Using matched bank/firm data, we find that public guarantees reduce allocative efficiency. With guarantees in place, poorly performing firms invest more and maintain higher rates of sales growth. Moreover, firms produce less efficiently in the presence of public guarantees. Consistently, we show that guarantees reduce the likelihood that firms exit the market. These findings suggest that public guarantees hinder restructuring activities and prevent resources to flow to the most productive uses.
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Private Equity, Jobs, and Productivity
Steven J. Davis, John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner, Javier Miranda
American Economic Review,
No. 12,
2014
Abstract
Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers US buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing to controls defined by industry, size, age, and prior growth. Buyouts lead to modest net job losses but large increases in gross job creation and destruction. Buyouts also bring TFP gains at target firms, mainly through accelerated exit of less productive establishments and greater entry of highly productive ones.
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Lingering Illness or Sudden Death? Pre-exit Employment Developments in German Establishments
Daniel Fackler, Claus Schnabel, J. Wagner
Industrial and Corporate Change,
No. 4,
2014
Abstract
Using a large administrative data set for Germany, this article compares employment developments in exiting and surviving establishments. Applying a matching approach, we find a clear “shadow of death” effect reflecting lingering illness: in both West and East Germany establishments shrink dramatically already several years before closure, employment growth rates differ strongly between exiting and surviving establishments, and this difference becomes stronger as exit approaches. Moreover, we provide first evidence that prior to exit the workforce becomes on average more skilled, more female, and older in exiting compared to surviving establishments. These effects are more clearly visible in West than in East Germany.
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The Role of Entrepreneurship in US Job Creation and Economic Dynamism
Ryan A. Decker, John Haltiwanger, Ron S. Jarmin, Javier Miranda
Journal of Economic Perspectives,
No. 3,
2014
Abstract
An optimal pace of business dynamics—encompassing the processes of entry, exit, expansion, and contraction—would balance the benefits of productivity and economic growth against the costs to firms and workers associated with reallocation of productive resources. It is difficult to prescribe what the optimal pace should be, but evidence accumulating from multiple datasets and methodologies suggests that the rate of business startups and the pace of employment dynamism in the US economy has fallen over recent decades and that this downward trend accelerated after 2000. A critical factor in accounting for the decline in business dynamics is a lower rate of business startups and the related decreasing role of dynamic young businesses in the economy. For example, the share of US employment accounted for by young firms has declined by almost 30 percent over the last 30 years. These trends suggest that incentives for entrepreneurs to start new firms in the United States have diminished over time. We do not identify all the factors underlying these trends in this paper but offer some clues based on the empirical patterns for specific sectors and geographic regions.
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