Haltiwanger, JohnScarpetta, StefanoSchweiger, Helena2012-06-222012-06-222006-11https://hdl.handle.net/10986/8873This paper reviews the process of job creation and destruction across a sample of 16 industrial and emerging economies over the past decade. It exploits a harmonized firm-level data set drawn from business registers and enterprise census data. The paper assesses the importance of technological factors that characterize different industries in explaining cross-country differences in job flows. It shows that industry effects play an important role in shaping job flows at the aggregate level. Even more importantly, differences in the size composition of firms-within each industry-explain a large fraction of the overall variability in job creation and destruction. However, even after controlling for industry/technology and size factors there remain significant differences in job flows across countries that could reflect differences in business environment conditions. The authors look at one factor shaping the business environment, namely, regulations on hiring and firing of workers. To minimize possible endogeneity and omitted variable problems associated with cross-country regressions, we use a difference-in-difference approach. The empirical results suggest that stringent hiring and firing costs reduce job turnover, especially in those industries that require more frequent labor adjustment. Regulations also distort the patterns of industry/size flows. Within each industry, medium and large firms are more severely affected by stringent labor regulations, while small firms are less affected, probably because they are partially exempted from such regulations or can more easily circumvent them.en-USCC BY 3.0 IGOAFFECTED WORKERSBUSINESS ENVIRONMENTCOUNTRY EFFECTSCOUNTRY LEVELCREATIVE DESTRUCTIONCROSS-COUNTRY ANALYSESCROSS-COUNTRY DIFFERENCESDOWNSIZINGECONOMETRIC ANALYSISECONOMIC DEVELOPMENTEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPIRICAL RESULTSEMPIRICAL STUDIESEMPLOYMENTEMPLOYMENT GROWTHEMPLOYMENT PROTECTION LEGISLATIONENTERPRISE RESTRUCTURINGENTRY COSTSFIRING COSTSFIRM DYNAMICSFIRM ENTRYFIRM EXITFIRM SIZEFIRM TURNOVERHIGH CORRELATIONJOB CREATIONJOB DESTRUCTIONJOB DESTRUCTION RATEJOB FLOWSJOB LOSSESJOB REALLOCATIONJOB TURNOVERJOBSLABOR ADJUSTMENTLABOR ADJUSTMENT COSTSLABOR MARKETLABOR MARKET REGULATIONSLABOR MOBILITYLABOR REALLOCATIONLABOR REGULATIONSLABOURLATIN AMERICANMEASUREMENT ERRORSNEGATIVE EFFECTNET EMPLOYMENTPOLICY ENVIRONMENTPOLICY RESEARCHPREVIOUS SECTIONPREVIOUS STUDIESPRIVATE FIRMSPRODUCING GOODSPRODUCT MARKETPRODUCT MARKET REGULATIONSPRODUCT MARKETSPRODUCTION PROCESSPRODUCTIVITY GROWTHRELATIVE IMPORTANCESELF EMPLOYEDSERVICE INDUSTRYSIGNIFICANT DIFFERENCESSIZE OF FIRMSSMALL FIRMSTOTAL EMPLOYMENTUNEMPLOYMENTWAGE BARGAININGWORKERSWorld Bank10.1596/1813-9450-4070