The Decline in Business Dynamism in Brazil
Business Dynamism, Job Creation, Job Reallocation.
In the last two decades, business dynamism, entrepreneurship, and fluidity in the labor market have declined substantially in developed countries. This phenomenon has profound consequences for productivity growth, wage growth, and job creation. Historically, the reallocation of jobs between firms reflects the transfer of resources from less productive firms to more productive firms. Furthermore, the dynamism in the labor market is positive for workers, and, most of the time, it reflects in a more fluid search for a better match and career leaps with salary gains. Although stylized facts about business dynamism are well documented in developed economies, empirical evidence in developing countries is sparse. This project proposes to empirically answer the following questions: how is business dynamism evolving in Brazil? Is the rate of job reallocation between companies and the creation of startups in Brazil decreasing as in developed countries? What is the role of informality in this trend? Preliminary findings from this study indicate that Brazil, like developed countries, has been experiencing a decline in business dynamism and labor market fluidity.