Do unions contribute to creative destruction?

We apply a shift-share approach and historical unionisation data from 1918 to study the impact of regional unionisation changes in Norway on regional wage and productivity growth, job-creation and -destruction and social security uptake during the period 2003–2012. As unionisation increases, wages grow. Lay-offs through plant closures and shrinking workplaces increase, causing higher retirement rates, while job creation, plant entry and other social security uptakes are unaffected. Productivity grows, partly by enhanced productivity among surviving and new firms and partly by less productive firms forced to close due to increased labour costs. Thus, unions promote creative destruction.

John Haltiwanger: recipient of the 2020 Global Award for Entrepreneurship Research

The 2020 Global Award for Entrepreneurship Research has been awarded to Professor John Haltiwanger. John Haltiwanger has made significant contributions to the field of entrepreneurship by improving our understanding of job creation and destruction, productivity growth, and the role of small- and medium-sized firms (SMEs) in economic development. He has played a major role in the careful development of large, longitudinal firm-level datasets, and introduced a novel and widely adopted measure of firm growth that addresses previous statistical biases. His work has influenced public policy and national statistical offices around the world.

Unemployment

This chapter offers a wide-ranging review of the macroeconomics of unemployment and related issues. Setting the scene with definitions, motivation, and facts, the discussion proceeds to a baseline wage and price setting model, which offers some first key insights. Formal models of trade unions and efficiency wages, and of the less standard, but topical, dual labour markets, are developed next. Dynamic issues, such as hysteresis and its underpinning factors, are also discussed. A major subsequent theme is the flows and search-based recent theory, emphasizing job creation and destruction, hiring and firing costs, and the Beveridge Curve. Additionally, the effects of technical progress on unemployment, wage inequality, and job polarization are discussed. The chapter concludes with a review of the high European unemployment of the 1980s and 1990s and the ‘shocks versus institutions’ debates on its causes.

How Destructive Is Innovation?

Entrants and incumbents can create new products and displace the products of competitors. Incumbents can also improve their existing products. How much of aggregate productivity growth occurs through each of these channels? Using data from the U.S. Longitudinal Business Database on all nonfarm private businesses from 1983 to 2013, we arrive at three main conclusions: First, most growth appears to come from incumbents. We infer this from the modest employment share of entering firms (defined as those less than 5 years old). Second, most growth seems to occur through improvements of existing varieties rather than creation of brand new varieties. Third, own‐product improvements by incumbents appear to be more important than creative destruction. We infer this because the distribution of job creation and destruction has thinner tails than implied by a model with a dominant role for creative destruction.