Flavio Calvino, Chiara Criscuolo, Rudy Verlhac, 23 June 2020

Start-ups play a key role in OECD economies, but the COVID-19 crisis is reducing their creation, challenging their survival, and limiting their growth. Business registrations have been dropping significantly in recent months and a missing generation of new firms has significant implications for economic outcomes, notably employment. This column argues that these can be mitigated by taking steps to support existing start-ups and the creation of new firms. Policymakers should tackle short-term challenges, supporting short-term liquidity and availability of funding, but also and importantly foster the ability of start-ups to grasp new business opportunities. Policies that reduce barriers to entrepreneurship, provide incentives for start-ups, and boost entrepreneurial potential could help speed up the recovery and preserve aggregate employment in the long term.

Petr Sedláček, Vincent Sterk, 25 April 2020

Startups are being hit hard by the COVID-19 pandemic and the lockdown. Introducing a ‘startup calculator’ that allows anyone to compute the aggregate employment losses under various economic scenarios, this column explores the effects of a decline in startup activity on aggregate employment. Job losses may be large and may last well beyond the pandemic itself.

Dong Cheng, Mario Crucini, Hyunseung Oh, Hakan Yilmazkuday, 08 November 2019

As the current narrative goes, the loss of US manufacturing jobs is due to competition from China and one way to get the jobs back is by running tariffs up the proverbial flagpole.  This column argues that in the case of the automobile industry, history shows exactly the opposite occurred. In the early 20th century, the US achieved exceptionalism in innovation, production and trade in automobiles without domestic tariff protection, while foreign nations languished behind high tariff walls designed to protect their fledgling domestic automobile industries. 

Pierre Cahuc, Franck Malherbet, Julien Prat, 11 June 2019

Standard economic models predict that employment protection legislation reduces both job destruction and job creation, with the negative impact on job creation caused by the anticipation of separation costs. This column shows that in France, this anticipation effect not only plays a key role in reducing job creation but also increases job destruction among low-skilled workers, an effect that is amplified by the presence of the minimum wage. This mechanism implies that job protection is strongly detrimental to employment in the French context.

Liu Yang, Bin Ni, 21 May 2019

Concerns have been raised that outward foreign direct investment may reduce domestic employment and lead to the ‘hollowing-out’ of the manufacturing industries at home. This column uses a unique dataset of Japanese firms’ overseas activities to show that going abroad does not necessarily lead to a reduction of domestic employment. Investment by Japanese firms into other Asian countries has a positive impact on domestic job creation and a negative impact on job destruction, whereas the impact of investment into European and North American countries is negative for both job creation and destruction in Japan.

James Feyrer, Erin Mansur, Bruce Sacerdote, 16 November 2015

Fracking has driven an oil and natural gas boom in the US over the past decade. This column examines the impact these mining activities have had on local and regional economies. US counties enjoy significant economic benefits, including increased wages and new job creation. These effects grow as the geographic radius is extended to include neighbouring areas in the region. The results suggest that the fracking boom provided some insulation for these areas during the Great Recession, and lowered national unemployment by as much as 0.5%.

Chiara Criscuolo, Peter Gal, Carlo Menon, 26 May 2014

Young firms are known to play a central role in job creation. This column presents the results of a new OECD project on the dynamics of employment (DynEmp) based on an innovative methodology using firm-level data. It confirms that young firms play a central role in creating jobs, and in enhancing growth and innovation. Public policies can help by enabling firms to experiment, and by fostering the reallocation of resources towards the most productive firms. Structural reforms to product, labour, and capital markets, as well as bankruptcy laws that do not overly penalise failure, are particularly relevant.

Manuel Adelino, Song Ma, David Robinson, 12 February 2014

There is a strong link between entrepreneurship and growth – young firms were responsible for almost all net job creation in the US economy over the last 30 years. This column presents new research into the responsiveness of firms of different ages to investment opportunities. Firms aged 0–23 months create about twice the total number of new jobs in response to local income shocks than firms that are more than six years old.

Ejaz Ghani, William Kerr, Stephen O'Connell, 04 December 2011

With millions of young people entering the global labour market each year, the question on their lips as well as policymakers’ on high is whether there will be enough jobs for them. But fewer are asking who actually creates these jobs. This column looks at data from India suggesting that young and small firms play a vital role. It argues that entrepreneurship works; policymakers just need to support it.

Roger Farmer, Dmitry Plotnikov, 05 September 2011

Can government spending help the economy recover from a recession by boosting job creation and lowering unemployment? Or is it a waste of money? This column addresses this question and others using a unique framework. It explains why fiscal policy was effective at ending the Great Depression but it argues that a big fiscal expansion may not be the best solution this time round.

Wendy Carlin, David Soskice, 14 August 2007

Private supply-side reforms in Germany are what caused the recovery – not government labour market and welfare state reforms. Further real wage cuts, generic labour and welfare reforms, or radical changes in corporate governance might not help. Future reform should focus on the functioning of the labour market without undermining the core labour system.

Michael Burda, 23 July 2007

Germany has finally gotten aboard the train of labour market, supply-side oriented reforms initiated by Europe’s success stories -- Netherlands, Denmark, Ireland, and the UK. Italy and France would do well to follow suit


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