PhD in Economics at the Department of Economics, University of Leuven (KU Leuven)

Promotor: Prof. dr. Jo Van Biesebroeck, KU Leuven

Members of the committee: Prof. dr. Eric Bartelsman (VU University Amsterdam) , Prof. dr. John Earle (George Mason University), Prof. dr. Joep Konings (KU Leuven), Prof. dr. Otto Toivanen (KU Leuven)

Summary

In market economies, firms are the main drivers of job creation and job destruction. My PhD focuses on two crucial stages in the life-cycle of firms that involve large amounts of job reallocation: the early years after startup and the period when two firms merge into a single company. The first stage is believed to be a major source of job creation. The second is associated with massive job loss. I investigate whether these common perceptions are supported by empirical evidence, and show that the employment outcomes differ strongly depending on the firm’s individual characteristics. To analyze these questions we need data that accurately reflect the dynamics of firms and employment in the economy. This issue is addressed first.

Papers

Geurts, K. (2016). Longitudinal firm-level data: problems and solutions. Small Business Economics, 46, 425–445 (2016).
https://doi.org/10.1007/s11187-015-9693-6

• Empirical measures of firm and employment dynamics using administrative data are biased due to missing links in the longitudinal observation of firms. We quantify the biases in a set of widely used empirical measures and find that they are especially large in the size distribution of entrants and exits, in firm-level growth estimates for medium and large firms, and in job reallocation measures. We show that an employee-flow linkage method is more effective in reducing bias than a traditional link method often used by statistical agencies. A consistent approach is developed for imputing firm-level growth measures of linked firms.

Geurts K. & Van Biesebroeck J. (2016). Firm creation and post-entry dynamics of de novo entrants. International Journal of Industrial Organization, 49, 59–104.
https://doi.org/10.1016/j.ijindorg.2016.08.002

• Using two state-of-the-art record linking methods, we distinguish de novo entrants from pre-existing companies that merely re-register as a new firm. We show that the initial size distribution of de novo entrants is extremely narrow. We show that within the same age cohort, growth rates of de novo firms are strongly increasing in firm size in the first five years of their lifecycle. Both findings are consistent with the passive learning model if growth frictions lead to delayed adjustment.

Geurts K. & Van Biesebroeck J. (2019). Employment growth following takeovers. The RAND Journal of Economics, 50, 916–950.
https://doi.org/10.1111/1756-2171.12300

• We construct a comprehensive sample of takeovers in Belgium that shows they are remarkably common. Takeovers involve both small and large firms and, over a five-year period, 17% of private sector employment. We estimate their impact on employment growth using a framework that explicitly takes into account that takeovers involve pairs of firms and that post-merger outcomes are heterogeneous. The average merger temporarily reduces employment of the combined entity by −1.4%. Mergers likely to be motivated by market power show a stronger and permanent employment reduction of −14%, whereas those motivated by efficiency gains lead to employment expansions of +10%.