Hiring by start-ups and regional labour supply

Young firms find it difficult to attract (skilled) workers. Using linked employer-employee data for Germany the paper presented in this PRICE Seminar investigates how local labor market conditions affect the hiring success of young firms. In a first step, the authors estimate the probability of the founder becoming an employer. In a second step they analyze how local conditions influence the probability of hiring skilled human capital. The results indicate a positive relationship between the local unemployment level and the hiring probability of young firms.