Who Creates Jobs in Hungary? The Role of Entering, Exiting and Continuing Firms Before and During the Crisis

Using a large panel of Hungarian firms, we study the relation between firm size and net job creation. Categorizing firms in size groups with the traditionally used measure of employment size in the base year suggests that small firms create a disproportionally higher number of jobs than large enterprises. This relation declines when average employment size is used instead, and it reverses when firm age is controlled for. The crisis brought about large declines in employment across all types of firms. The analysis reveals that the main reason for this declines is the increased job destruction rates. Whole job creation rates were stable during the crisis, job destruction increased by about 4 percentage points. We find that the net growth of exporting and foreign-owned firms was reduced the most by the crisis, while state-owned firms kept most of the pre-crisis jobs.