Do Startups Provide Employment Opportunities for Disadvantaged Workers?

33 Pages Posted: 11 Jun 2018

See all articles by Daniel Fackler

Daniel Fackler

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Department of Economics

Michaela Fuchs

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Lisa Hölscher

Halle Institute for Economic Research

Claus Schnabel

University of Erlangen-Nuremberg; IZA Institute of Labor Economics

Abstract

This paper analyzes whether startups offer job opportunities to workers potentially facing labor market problems. It compares the hiring patterns of startups and incumbents in the period 2003 to 2014 using administrative linked employer-employee data for Germany that allow to take the complete employment biographies of newly hired workers into account. The results indicate that young plants are more likely than incumbents to hire older and foreign applicants as well as workers who have instable employment biographies, come from unemployment or outside the labor force, or were affected by a plant closure. However, an analysis of entry wages reveals that disadvantageous worker characteristics come along with higher wage penalties in startups than in incumbents. Therefore, even if startups provide employment opportunities for certain groups of disadvantaged workers, the quality of these jobs in terms of initial remuneration seems to be low.

Keywords: startups, young firms, employment, wages, linked employer-employee data

JEL Classification: J31, J63, L26, M51

Suggested Citation

Fackler, Daniel and Fuchs, Michaela and Hölscher, Lisa and Schnabel, Claus, Do Startups Provide Employment Opportunities for Disadvantaged Workers?. IZA Discussion Paper No. 11556, Available at SSRN: https://ssrn.com/abstract=3193310

Daniel Fackler (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Department of Economics ( email )

Lange Gasse 20
Nuernberg, D-90403
Germany

Michaela Fuchs

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Lisa Hölscher

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Claus Schnabel

University of Erlangen-Nuremberg ( email )

Institut für Wirtschaftsforschung
Lange Gasse 20
D-90403 Nuernberg
Germany
+49 911 5302 330 (Phone)
+49 911 5302 721 (Fax)

HOME PAGE: http://https://www.arbeitsmarkt.rw.fau.de/english-version/staff/prof-dr-claus-schnabel/

IZA Institute of Labor Economics

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Germany

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