Author(s):
1. Georgios Panos,

Abstract:
Employment growth is often the primary motivation behind entrepreneurial and industrial policy. Employment generation has also been described as the main goal of global economic policy by almost every major international institution for the next few years, in light of the recent rising unemployment trends throughout the world. The literature has established that in recent years the small and medium enterprise (SME) sector has been the largest creator of new jobs, in both developed and transition economies. However, although there seems to be a consensus that SMEs are responsible most of the new job creation, an important question yet to be addressed in the literature is whether a few high-growth firms account for most of new employment. This study assesses the patterns of job creation and its specifics in the Western Balkans, using newly available data from the World Bank Enterprise Surveys for Albania, Bosnia & Herzegovina, Bulgaria, Croatia, FYROM, Montenegro, Serbia, and Slovenia. We investigate the specifics of job creation, skilled-labour demand and rent-sharing among some 6,000 firms in the eight countries. We address some interesting novel questions, specifically: (a) Do SMEs exhibit higher employment growth rates in the five countries? (b) Is employment generation homogeneous among SMEs in the eight countries or are a few high-growing firms responsible for most of the employment generation? (c) Is foreign ownership and international integration, in terms of imported inputs, exports and foreign direct investment, related to higher job creation, and/or skilled labour demand? (d) Are the incidence and rates of rent-sharing higher among foreign owned firms? The results of this study reveal interesting patterns highlighting considerable sources of heterogeneity with respect to job creation, skilled labour demand and rent-sharing in the eight economies. Specifically, we find that the SME sector exhibits higher rates of employment growth, with some interesting patterns of heterogeneity stemming from foreign ownership and size among the five countries. Moreover, we find that while in the higher performing countries increased levels of international integration are associated with an increased demand for skilled labour, the opposite is true in the lower performers. Finally, we find considerable evidence that foreign ownership is related to higher rent-sharing, in terms of higher of wages of workers in foreign affiliates in periods of higher profits. The results are robust a number of different tests.

Key words:
Job creation, Skilled labour demand, Rent-sharing, International integration

Thematic field:
Economic development in the 21st century

Date of abstract submission:
01.06.2012.

Number of visits:
408

Conference:
REDETE 2012