Labour market rigidity

Who creates jobs, who destroys jobs? Small firms, large firms and labour market rigidity

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Andrew Kerr, Martin Wittenberg, Jairo Arrow on 15 January 2013

Firm-level data for the period 2005 to 2011 indicate that job creation and destruction rates in South Africa are only slightly lower than among OECD countries. Around 10% of existing jobs are destroyed each year, while the number of new jobs is around 9.5% of existing employment. Larger firms have higher rates of net job creation than small firms. The relatively high reallocation of employment across firms suggests lower rigidities in the South African labour market than is sometimes believed.