Employment and Investment of the West German Industry 1968-1998 A Descriptive Analysis

Small and medium-sized enterprises are considered to be the principal generator of new jobs in the industrialised countries at least since the Birch (1979) study. According to this image, they are also stabilising the economy during the business cycles because of the lower volatility of their employment and investment. The results of the following studies were ambiguous, though. This is also valid for the studies about Germany, that are at most based on the Census of Businesses or the Census of Employment. The few studies about the employment and investment behaviour in the West German industry investigate too short periods. The present investigation tries to cure this lack by analysing the differences between small and large industrial enterprises with regard to their employment and investment behaviour for the period between 1968 and 1998. A link between firm size and the employment and investment behaviour can only be found in the nineties. However, with small and medium-sized enterprises being more stable over the investigated period, there is a relation between the size and the volatility of industrial enterprises.