New Evidences on What Job Creation and Job Destruction Represent

Author Name Carlos Henrique CORSEUIL  (University College London / IPEA) /ICHIMURA Hidehiko  (Faculty Fellow, RIETI / The University of Tokyo)
Creation Date/NO. April 2006 06-E-023
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An alternative measure for gross job flows, incorporating within plant job reallocation, is proposed. Based on data with detailed information about workers occupation, we report the following results:

1. Most of the stylized facts about job reallocation do not change when we take into account within plant job reallocation.

2. Job creation and job destruction figures are decomposed into job created (destructed) by new (dying) firms, job created (destructed) by existing firms by expanding (contracting) workers in existing jobs, and the jobs created (destructed) due to the birth (death) of job categories in incumbent (surviving) establishments. We call the third component as the job mix component. It turned out that the job mix component corresponds to 30% (40%) per cent of job creation (destruction).

3. Also, we describe patterns of job reallocation, and each of the components, by job characteristics as opposed to workers characteristics. The job mix component of both job creation and destruction are concentrated among non-production activities and managerial positions.

4. We interpret these results as evidence that organizational change should be considered as one of the most relevant underlying causes of the employment movements reflected by job creation and job destruction measures.

5. Finally we evaluate the relevance of specific dimensions of organizational change, such as intra-firm reallocation of job categories, outsourcing, changes in the product mix, and labor division. The results points to labor division as the most relevant dimension of organizational change among the ones considered.