Job creation, job destruction and reallocation in Sub-Saharan Africa: Firm-level evidence from Kenyan manufacturing sector

Figures & data

Table 1. The distribution of firms in the sample from 1992 to 1999

Size class	Number	Total employment	Average employment
Micro (Emp<10)	409	1732	4.2
Small (Emp≥10 < 50)	381	9540	25.0
Medium (Emp≥50 < 100)	192	12,625	65.8
Large (Emp≥100)	287	109,689	382.2
Total	1269	133,586	105.3

Source: Author’s calculations from CSAE data.

Table 2. The distribution of firms according to employment and age

Employment	Very young (0–5)	Young (Age 6–10)	Mature (Age 11–20)	Old (Age>20)	Total
Panel (a): Percentage of firms
Emp<10	6.7	8.5	7.9	8.7	31.8
Emp≥10 < 50	1.6	2.9	12.2	13.6	30.3
Emp≥50 < 100	0.4	1.2	4.4	9.2	15.3
Emp≥100	0.7	1.6	7.8	12.5	22.6
Total	9.4	14.2	32.3	44.0	100
Panel (b): Percentage of employment
Emp<10	0.3	0.3	0.3	0.4	1.3
Emp≥10 < 50	0.3	0.5	2.9	3.5	7.2
Emp≥50 < 100	0.2	0.8	2.9	5.6	9.5
Emp≥100	1.6	0.4	2.7	49.3	82.0
Total	2.4	2.0	8.8	58.8	100

Source: Author’s calculations from CSAE data.

Table 3. Annual rates of job creation, job destruction and job reallocation: Percent

Year	JC (%)	-JD (%)	GJRR(%)	NJRR(%)
All years (1992–1999)	8.09	9.66	17.61	−1.75
1992–1993	23.46	22.96	45.68	−0.24
1993–994	21.23	23.21	44.5	−2.04
1994–1995	2.96	2.72	5.68	0.24
1995–1996	2.47	2.96	5.44	−0.5
1996–1997	2.72	3.21	5.97	−0.53
1997–1998	2.96	4.94	7.91	−1.99
1998–1999	8.89	17.28	25.68	−8.88
Average	10.40	12.42	22.64	−2.24

Source: Author’s calculations from CSAE data. JC, job creation; JD, job destruction; GJRR, gross job reallocation rates; NJRR, net job creation rates.

Table 4. Rates of job creation, job destruction and job reallocation by firm size: Percent

Size class	JC (%)	-JD (%)	GJRR (%)	NJRR (%)
All	8.09	9.66	17.75	−1.57
Micro	15.89	19.56	35.45	−3.67
Small	21.26	29.13	50.39	−7.87
Medium	18.23	26.04	44.27	−7.81
Large	28.22	25.09	53.31	3.13

Source: Author’s calculations from CSAE data. JC, job creation; JD, job destruction; GJRR, gross job reallocation rates; NJRR, net job creation rates.

Table 5. Rates of job creation, job destruction and job reallocation by firm age: Percent

Size class	JC (%)	-JD (%)	GJRR (%)	NJRR (%)
All	8.09	9.66	17.75	−1.57
Very young	6.13	5.81	11.94	0.32
Young	8.54	9.21	17.75	−0.67
Mature	9.73	10.73	20.46	−1.0
Old	8.33	11.68	20.01	−3.35

Source: Author’s calculations from CSAE data. JC, job creation; JD, job destruction; GJRR, gross job reallocation rates; NJRR, net job creation rates.

Table 6. Rates of job creation, job destruction and job reallocation by firm age and size: Percent

Age	Size class	JC (%)	-JD (%)	GJRR (%)	NJRR (%)
Very young (Age = 1–5)	Micro	16.87	15.66	32.53	1.21
	Small	23.81	14.29	38.1	9.52
	Medium	-	-	-	-
	Large	-	-	-	-
Young (Age = 6–10)	Micro	16.35	23.08	39.43	−6.73
	Small	31.43	20.0	51.43	11.43
	Medium	13.33	26.67	40.0	−13.34
	Large	40.0	30.0	70.0	10.0
Mature (Age = 11–20)	Micro	14.58	18.75	33.33	−4.17
	Small	24.83	29.53	54.36	−4.7
	Medium	14.81	31.48	46.29	−16.67
	Large	30.53	18.95	49.48	11.58
Old Age = 21+	Micro	15.09	23.58	38.67	−8.49
	Small	16.27	32.53	48.8	−16.26
	Medium	21.24	23.89	45.13	−2.65
	Large	26.14	28.76	54.9	−2.62

Source: Author’s calculations from CSAE data. JC, job creation; JD, job destruction; GJRR, gross job reallocation rates; NJRR, net job creation rates.

Table 7. The contribution of firm size and age to gross job reallocation

Explanatory variable	(1)	(2)	(3)	(4)
	OLS	OLS	FGLS	FGLS
Small firms t-1	0.777***	0.728***	0.777***	0.728***
	(0.154)	(0.149)	(0.155)	(0.153)
Medium firms t-1	1.667***	1.630***	1.667***	1.630***
	(0.187)	(0.185)	(0.180)	(0.179)
Large firms t-1	2.924***	2.866***	2.924***	2.866***
	(0.186)	(0.186)	(0.178)	(0.175)
Age t-1	−0.015	−0.001	−0.015	−0.001
	(0.013)	(0.006)	(0.013)	(0.004)
Ln(wages) t-1	−0.091	−0.105	−0.091	−0.105
	(0.073)	(0.071)	(0.069)	(0.068)
Ln(K:L) t-1	0.023	0.022	0.023	0.022
	(0.035)	(0.034)	(0.040)	(0.040)
Ln(labor productivity) t-1	0.015	0.023	0.015	0.023
	(0.061)	(0.061)	(0.053)	(0.053)
Year dummies included	Yes	No	Yes	No
Industry dummies included	Yes	Yes	Yes	Yes
Ownership included	Yes	Yes	Yes	Yes
Constant	0.943*	0.975*	0.870*	.923*
	(0.489)	(0.474)	(0.478)	(0.462)
N	436	436	436	436
R^2	0.554	0.551

Source: Author’s calculations from CSAE data.

Notes: The dependent variable is GJRR. Standard errors in parentheses; statistical significance: * p < 0.05, *** p < 0.001.

Table 8. The contribution of firm size to employment growth

Explanatory variable	(a)	(b)	(c)	(d)
	OLS	OLS	FGLS	FGLS
Small	0.192***	0.310***	0.192***	0.310***
	(0.020)	(0.015)	(0.015)	(0.017)
Medium	0.214***	0.332***	0.214***	0.332***
	(0.022)	(0.015)	(0.019)	(0.022)
Large	0.213***	0.351***	0.213***	0.350***
	(0.021)	(0.015)	(0.018)	(0.020)
Age t-1	−0.001**	−0.001**	−0.001**	−0.001**
	(0.000)	(0.000)	(0.000)	(0.000)
Ln(Labor productivity) t-1	−0.007	−0.017**	−0.007	−0.017**
	(0.006)	(0.007)	(0.006)	(0.007)
Ln(wages) t-1	0.005	−0.002	0.005	−0.001
	(0.007)	(0.008)	(0.007)	(0.009)
Ln(Capital intensity) t-1	−0.008*	−0.017**	−0.008*	−0.017**
	(0.005)	(0.006)	(0.004)	(0.005)
Year dummies included	Yes	No	Yes	No
Industry dummies included	Yes	Yes	Yes	Yes
Ownership included	Yes	Yes	Yes	Yes
Constant	−0.052	−0.020	−0.0062	0.019
	(0.047)	(0.058)	(0.0485)	(0.057)
N	766	766	766	766
R^2	0.6086	0.4272

Source: Author’s calculations from CSAE data.

Note: The dependent variable is employment growth (g_it). Standard errors in parentheses; statistical significance: * p < 0.05, ** p < 0.01, *** p < 0.001.

Table 9. The contribution of firm size to Job creation

Explanatory variable	(a)	(b)	(c)	(d)
	OLS	OLS	FGLS	FGLS
Small	−0.0662***	−0.0732***	−0.0662***	−0.0732***
	(0.0186)	(0.0200)	(0.0149)	(0.0154)
Medium	−0.0860***	−0.0821***	−0.0860***	−0.0821***
	(0.0196)	(0.0198)	(0.0197)	(0.0204)
Large	−0.0805***	−0.0895***	−0.0805***	−0.0895***
	(0.0200)	(0.0217)	(0.0175)	(0.0181)
Ln(wages) t-1	0.0029	0.0010	0.0029	0.0010
	(0.0087)	(0.0088)	(0.0075)	(0.0078)
Ln(Capital intensity) t-1	−0.0011	−0.0012	−0.0011	−0.0012
	(0.0048)	(0.0050)	(0.0037)	(0.0039)
Ln(Labor productivity) t-1	0.0086	0.00913	0.0086	0.0091
	(0.0063)	(0.0063)	(0.0053)	(0.0055)
Age t-1	−0.0019	−0.0023	−0.0019	−0.0023
	(0.0015)	(0.0016)	(0.0013)	(0.0014)
Time dummies included	Yes	No	Yes	No
Industry dummies included	Yes	Yes	Yes	Yes
Ownership included	(Yes)	Yes	Yes	Yes
Constant	0.0195	0.0541	0.00597	0.0544
	(0.0570)	(0.0566)	(0.0481)	(0.0492)
N	270	270	270	270
R^2	0.256	0.182

Source: Author’s calculations from CSAE data.

Notes: The dependent variable is JC. Standard errors in parentheses, significance levels are

*** p < 0.001.

Table 10. The contribution of firm size to job destruction

Explanatory variable	(1)	(2)	(3)	(4)
	OLS	OLS	FGLS	FGLS
Small	0.2645***	0.3872***	0.2645***	0.3872***
	(0.0213)	(0.0117)	(0.0157)	(0.0165)
Medium	0.2948***	0.4202***	0.2948***	0.4202***
	(0.0224)	(0.0116)	(0.0188)	(0.0209)
Large	0.2871***	0.4134***	0.287***	0.413***
	(0.0220)	(0.0107)	(0.0183)	(0.0201)
Ln (wages) t-1	0.0086	0.0057	0.0086	0.0057
	(0.0060)	(0.0070)	(0.0068)	(0.0084)
Ln(Capital intensity) t-1	−0.0069	−0.0133*	−0.0069	−0.0133**
	(0.0051)	(0.0058)	(0.0041)	(0.0050)
Ln(labor productivity) t-1	−0.0113	−0.0228**	−0.0113*	−0.0228**
	(0.0060)	(0.00692)	(0.0057)	(0.0070)
Age t-1	−0.0038**	−0.0048**	−0.0038**	−0.0048**
	(0.0015)	(0.0018)	(0.00121)	(0.0015)
Time dummies included	Yes	No	Yes	No
Industry dummies included	Yes	Yes	Yes	Yes
Ownership included	Yes	Yes	Yes	Yes
Constant	−0.0662	−0.0819	−0.0552	−0.0549
	(0.0447)	(0.0514)	(0.0455)	(0.0545)
N	496	496	496	496
R^2	0.776	0.658

Source: Author’s calculations from CSAE data.

Notes: The dependent variable is JD. Standard errors in parentheses; significance levels are

*p < 0.05, ** p < 0.01, *** p < 0.001.

Table 11. Correlation matrix for the main variables

	Growth	Ln(Size)t-1	Age t-1	Ln(LP) t-1	Ln(w) t-1	Ln(CI) t-1	Anyfor
Growth	1.0000
Ln(Size)t-1	0.7776*	1.0000
Age t-1	0.1598*	0.2864*	1.0000
Ln(LP) t-1	0.2663*	0.3922*	0.1371*	1.0000
Ln(w) t-1	0.1242*	0.2116*	0.0836*	0.5870*	1.0000
Ln(CI) t-1	0.3230*	0.5216*	0.3030*	0.4859*	0.3012*	1.0000
Anyfor	0.2186*	0.3125*	0.1949*	0.1605*	0.1410*	0.2229*	1.0000

Source: Author’s calculations data. Significance level, *p < 0.05,. Number of observations (N) is 774.

Note: Growth is employment growth, Ln(LP) _t-1, Ln(w) _t-1 and Ln(CI) _t-1 are the natural logarithm of Labor productivity, wages and capital intensity, all lagged by one period, and Anyfor is indicator variable for ownership, equal one if firm has some foreign ownership, zero otherwise.

Table 12. Correlation matrix for the main variables

	Growth	Ln(Size)t-1	Age t-1	Ln(LP) t-1	Ln(w) t-1	Ln(CI) t-1	Anyfor
Growth	1.0000
Ln(Size)	0.7687*	1.0000
Age	0.1319*	0.1508*	1.0000
Ln(LP)	0.2995*	0.4127*	0.1581*	1.0000
Ln(w)	0.2165*	0.2572*	0.1179*	0.5988*	1.0000
Ln(CI)	0.3597*	0.5406*	0.3317*	0.5019*	0.3518*	1.0000
Anyfor	0.2186*	0.1339*	0.2303*	0.1591*	0.1700*	0.2283*	1.0000

Source: Author’s calculations data. Significance level, *p < 0.05,

Number of observations (N) is 774.

Note: Growth is employment growth, Ln(LP) _t-1, Ln(w) _t-1 and Ln(CI) _t-1 are the natural logarithm of Labor productivity, wages and capital intensity, all lagged by one period, and Anyfor is indicator variable for ownership, equal one if the firm has some foreign ownership, zero otherwise.

Table 13. Collinearity diagnostics

Variable	VIF	SQRT VIF	Tolerance	R^2		Eigenvalue	Cond. index
Small t-1	1.71	1.31	0.5856	0.4144	1	5.7504	1.0000
Medium t-1	1.69	1.30	0.5925	0.4075	2	1.1071	2.2791
Large t-1	2.06	1.44	0.4845	0.5155	3	1.0002	2.3978
Age t-1	1.14	1.07	0.8771	0.1229	4	0.6487	2.9772
Ln(LP)t-1	1.83	1.35	0.5468	0.4532	5	0.2407	4.8879
Ln(w) t-1	1.53	1.24	0.6535	0.3465	6	0.2241	5.0081
Ln(CI)t-1	1.64	1.28	0.6089	0.3911	7	0.2051	5.1499
Anyfor	1.17	1.08	0.8528	0.1472	8	0.1660	7.9775
Mean VIF	1.60				9	0.1178	8.7913
Note:	Condition Number						8.7913

Eigenvalues & Cond Index computed from scaled raw sscp (w/intercept).

Table 14. Additional collinearity diagnostics

Variable	VIF	SQRT VIF	Tolerance	R^2		Eigenval	Cond. index
Small	1.24	1.12	0.8036	0.1964	1	5.5807	1.0000
Medium	1.22	1.10	0.8227	0.1773	2	1.0831	2.2699
Large	1.40	1.18	0.7142	0.2858	3	1.0001	2.3622
Age	1.14	1.07	0.8757	0.1248	4	0.6795	2.8658
Ln(LP)t-1	1.78	1.34	0.5605	0.4395	5	0.3742	3.8618
Ln(w) t-1	1.55	1.24	0.6468	0.3532	6	0.2314	4.9112
Ln(CI)t-1	1.55	1.25	0.6438	0.3562	7	0.2007	5.7288
Anyfor	1.15	1.07	0.8698	0.1302	8	0.1571	8.0851
Mean VIF	1.38				9	0.1003	9.0032
Note:	Condition Number						9.0032

Eigenvalues and Cond Index computed from scaled raw sscp (w/intercept).

Table A1. Description of the key variables.

Variable	Description	Mean	Standard Dev.
Labor productivity	This is the natural logarithm of real output per worker in US$	8.85	1.30
Capital intensity	This is natural logarithm of real US$ capital-labor ratio; K:L ratio	8.51	1.80
Wages US$	Natural logarithm of real monthly wages in US$	4.30	0.93
Employment	The number of workers employed by the firm	105.27	266.33
Ownership	Dummy = 1, if firm has some %age of foreign ownership	0.15	0.36
Firm size	This is size of the firm as measured by the natural logarithm of number of workers in the firm	1.27	1.91
Firm age	This is how long the firm has taken in operation since its formation.	20.53	13.95
Micro	Dummy = 1 if firm employs less than 10 workers	0.13	0.33
Small	Dummy = 1 if firm employs 10 or more workers but less than 50.	0.12	0.32
Medium	Dummy = 1 if firm employs 50 or more workers but less than 100.	0.06	0.24
Large	Dummy = 1 if firm employs 100 or more workers.	0.09	0.28
Very young	Dummy = 1 if firm has been in operation for 5 or less years.	0.10	0.29
Young	Dummy = 1 if firm has been in operation for between 6 and 10 years.	0.14	0.34
Mature	Dummy = 1 if firm has been in operation for between 11 and 20 years.	0.28	0.45
Old	Dummy = 1 if firm has been in operation for more than 20 years	0.40	0.49