Job creation over the business cycle and the theory of poaching explored for the case of Austria

Abstract

This thesis uses Austrian social insurance data from 2000 to 2014 to analyze how job creation evolves over the business cycle. For this analysis, firms are split into quintiles according to the median monthly wage earnings of all of their employees, such that one can examine how high paying firms react to a change in the unemployment rate in comparison to low paying firms. For this purpose the net job creation rate or employment growth rate is decomposed into a hire and a separation rate, which are further split into hires from employment and hires from non-employment, likewise for the separations. This makes it possible to examine if high paying firms display stronger pro-cyclical growth, as suggested by the theory of poaching by Moscarini and Postel-Vinay (2012). Yet, results in favor of the wage ladder model cannot be found in general, only for specific samples of the dataset and when particular measures of the business cycle such as the twelve month differences in regional unemployment rates are used, is there evidence in favor of poaching. The novelty of this thesis is the monthly dataset used, which allows to more accurately distinguish between separations to employment and separations to from non-employment, likewise for hires from employment and non-employment, hence making a more detailed analysis of the theory of poaching possible.