The Role of Firm Size and Firm Age in Employment Growth: Evidence for Slovenia, 1996-2013

Using a nonparametric regression approach, this paper examines the role of firm size and firm age in net employment growth and the differential response of firms to the business cycle. An inverse univariate relationship between firm size and net employment growth disappears after controlling for firm age. With age control, the relationship between net employment growth and firm size is positive but diminishes with firm size. Young firms exhibit higher job creation and destruction rates and higher net employment growth rates than mature firms. Small and young firms are more sensitive with regard to net employment growth to the cyclical downturn than large and old firms.