Committing to grow : employment targets and firm dynamics / Ufuk Akcigit, Harun Alp, André Diegmann, Nicolas Serrano-Velarde ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
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Committing to grow
Discovery
1920687408
URN
urn:nbn:de:gbv:3:2-1130022
DOI
ISBN
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Publication history
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, [2025?]
Content
1 Online-Ressource (III, 78 Seiten, 6,76 MB) : Diagramme
Edition
This version: 03.03.2025
Language
eng
Comment
Literaturverzeichnis: Seite
Sprache der Zusammenfassung: Englisch
Abstract
We examine effects of government-imposed employment targets on firm behavior. Theoretically, such policies create "polarization," causing low-productivity firms to exit the market while others temporarily distort their employment upward. Dynamically, firms are incentivized to improve productivity to meet targets. Using novel data from East German firms post-privatization, we find that firms with binding employment targets experienced 25% points higher annual employment growth, a 1.1% points higher annual exit probability, and 10% points higher annual productivity growth over the target period. Structural estimates reveal substantial misallocation of labor across firms and that subsidizing productivity growth would yield twice the long term increases in employment.
Series
IWH-Diskussionspapiere ; no. 17 (August 2023) [rev.] ppn:837399270