Microsimulation of Businesses in ILUMASS Part 2: Firmography Rolf Moeckel and Michael Wegener

1. Microsimulation of Businesses in ILUMASS Part 2: Firmography Rolf Moeckel and Michael Wegener Workshop of the Land Use Transportation Modelling Group University College London, 2 July 2005

2. Theory of Firmography Cohen, Cyert(1975): Theory of the Firm Birch (1979): The Job Generation Process Freeman, Hannan (1983): Organizational Populations Willeboordse (1986): Towards a 'demogra-phy' of firms Cyert, March (1992): A behavioral theory of the firm Carroll, Hannan (1999): The Demography of Corporations and Industries Firmography

3. Firmography Businesses are updated every simulation period. Events include: - new businesses are established - employers hire or fire employees - unsuccessful firms run out of businesses Events are simulated by Markov Models in random order. Firmography

4. Sectoral Change: Employment Firmography Service Sector 2010 2020 2030 Industry Agriculture

5. Economic Waves: Employment Change Boom Firmography Regression Boom Regression

6. 25 Percent 75 Percent Change of Number of Jobs The sectoral change and the economic prosperity determine the number of jobs. Firmography Change of number of jobs + Establishment of new firms - Decline of existing firms + Growth of existing firms - shrinking of existing firms

7. Estimating Number of Birth and Declines The change of number of jobs per business type is estimated based on - sectoral change, - economic prosperity, and - number of highly-qualified people. The three elements are aggregated by Cobb-Douglas-Function. Firmography

8. Share of Highly-Educated People Firmography

9. Estimating Number of Birth and Declines The employment change by birth and de-clines is estimated based on sectoral change, economic prosperity, and number of highly-qualified people. Estimation for business type x: + 2 % Reg. data of new establishments: 10 % Reg. data of declining businesses: 6 % Resulting Change: + 4 % Estimation new establishments: 9 % Estimation declining businesses: 7 % Resulting Change + 2 % Firmography

10. New Business Establishments New establishments have to find a location even if the site characteristics are not favou-rable for the business. A few smaller businesses are located at the entrepreneur's home. New businesses tend to have rather few employees. Firmography

11. Size of New Business Establishments Firmography

12. Decline of Businesses Every simulation period some firms run out of business, depending on the structural change and economic prosperity. Mostly, small business are closed. Larger businesses try to absorb the economic recession by reducing the number of em-ployees. Firmography

13. Size of Declining Businesses Firmography

14. Change of Number of Employees Businesses may grow or shrink by hiring or firing employees. Probabilities for growing and shrinking are estimated based on sectoral change and economic prosperity. Firmography

15. 4 % decline 8 % growth Estimating Change of Business Size Depending on the overall economic trend em-ployers hire or fire employees. Firmography no change

16. Firmography

17. Model run Firmography