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High-growth Firms and the Labor Market Entry of First-generation Immigrants
Institute of Retail Economics, Stockholm, Sweden; Dalarna University, Falun, Sweden.
Örebro University, Örebro University School of Business. Institute of Retail Economics, Stockholm, Sweden.ORCID iD: 0000-0003-3180-3722
2020 (English)In: International Review of Entrepreneurship, ISSN 2009-2822, Vol. 18, no 2, p. 181-202, article id 1624Article in journal (Refereed) Published
Abstract [en]

The number of refugees in Europe has increased dramatically in recent years, and many countries are facing great challenges to integrating these refugees into their societies. A small group of high-growth firms have at the same time attracted attention because they create the most jobs at any given point in time. Using matched employer-employee data from Statistics Sweden, we find that these high-growth firms in general are more likely to recruit first-generation immigrants that are unemployed. This provides support for the hypothesis that managers in high-growth firms, to greater extents, recruit marginalized individuals because they want to take advantage of their growth opportunities. Rapidly growing firms are thus less selective in their hiring decisions, and policies that are focused on increasing the number of high-growth firms might also help immigrants who face difficulties entering the labor market.

Place, publisher, year, edition, pages
Senate Hall Academic Publishing , 2020. Vol. 18, no 2, p. 181-202, article id 1624
Keywords [en]
firm growth, gazelles, high-growth firms, immigration, integration
National Category
Economics
Identifiers
URN: urn:nbn:se:oru:diva-104376ISI: 000600129500001OAI: oai:DiVA.org:oru-104376DiVA, id: diva2:1738193
Note

Funding agencies:

R&D Fund of the Swedish Tourism and Hospitality Industry (BFUF)

Handelsrådet (The Swedish Retail and Wholesale Council)

Available from: 2023-02-21 Created: 2023-02-21 Last updated: 2024-01-12Bibliographically approved
In thesis
1. Toward more inclusive labor markets: A firm-level perspective on hiring outsiders
Open this publication in new window or tab >>Toward more inclusive labor markets: A firm-level perspective on hiring outsiders
2023 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis contains five self-contained papers on firms’ hiring decisions regarding outsiders and how these decisions interact with insiders. Outsiders are broadly defined as people with a weak labor market position, e.g., unemployed, non-Western migrants or minimum-wage workers. Insiders are those who are securely employed.

In paper (1), we investigate what characterizes the firms that hire unemployed non-Western immigrants. The results show that firms active in the service industries are more likely to hire unemployed non-Western immigrants. However, this is a rare event, suggesting this sector is unlikely to ever be able to absorb more than a fraction of this outsider group under current labor market conditions.

In paper (2), we analyze whether labor cost reductions induce firms to hire outsiders in the retail industry. In this case, a Swedish youth payroll tax cut is used to determine if a reduction in firms’ labor costs increases their employment of minimum-wage retail workers. The results show that reduced labor costs incentivize firms to increase their employment of workers whose wages are close to negotiated minimum wages.

In paper (3), we investigate whether the gains from the abovementioned payroll tax cut have been absorbed in higher wages for insiders rather than increasing employment. The results show that while insiders saw their total earnings increase, the main reason for their earnings increase was that they worked more hours.

Finally, we explore whether firms’ hiring decisions regarding outsiders are related to their growth rate in papers (4) and (5). The results in paper (4) show that the fastest growing firms are more likely to hire outsiders. However, this finding does not hold when new firms are examined separately and over time. In contrast, the results in paper (5) indicate that high-growth new firms tend to recruit individuals with higher skills during their first three years of operation, suggesting that a firm’s time dimension and point in its lifecycle are important.

Place, publisher, year, edition, pages
Örebro: Örebro universitet, 2023. p. 22
Series
Örebro Studies in Economics, ISSN 1651-8896 ; 47
Keywords
Labor costs, minimum wage, payroll tax, employment, immigrants, unemployment, high-growth firms
National Category
Economics
Identifiers
urn:nbn:se:oru:diva-103017 (URN)9789175294902 (ISBN)
Public defence
2023-03-16, Örebro universitet, Forumhuset, Hörsal F, Fakultetsgatan 1, Örebro, 13:00 (Swedish)
Opponent
Supervisors
Available from: 2023-01-11 Created: 2023-01-11 Last updated: 2023-02-23Bibliographically approved

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High-growth Firms and the Labor Market Entry of First-generation Immigrants

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Seerar Westerberg, Hans

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