Essays on financial conditions, firm dynamics, and plant survival

Abstract

This thesis consists of three empirical essays analysing firm and plant dynamics. In particular, the thesis examines the determinants of firm entry and exit, survival of new plants and firms’ decisions to open and close down plants. Several studies (e.g. OECD (2003) and Foster, Haltiwanger, and Krizan (2001)) have shown that micro-level dynamics contribute to aggregate productivity growth through a process o: creative destruction where the most successful business units survive and new units replace less productive old units. New firms and plants are also thought to have an important role in innovative activity and technological progress. Furthermore, each decision to establish a new business unit and to close down an existing unit involves the creation and destruction of jobs. From the policy perspective, it is thus important to understand the determinants of micro-level dynamics behind the aggregate economic and employment development.