Abstract

Young companies create employment. Recent research suggests that start-ups are often unable to exploit their employment potential, as many applicants prefer a job in an established company. Therefore, a larger labor supply offers young companies special opportunities. For example, companies that were founded during the recession in 2007 and 2008 were able to benefit from the relatively favorable labor supply. Despite the crisis, these companies hired employees more frequently and grew significantly faster on average than companies that were founded before or after the crisis. This size advantage is lasting; even years later, they are still significantly larger than start-ups that were founded before or after the crisis. The reason for this is likely to be the favorable labor supply at the beginning, which enabled them to employ staff who would have found better-paid and more secure jobs in existing companies in more favorable economic times. This research project is now investigating whether these cyclical-temporal effects can also be transferred to the regional variation in labor supply.