Janis Berzin's webpage

Family Wealth and Family Firm Employment

Abstract:
Some types of firm ownership may provide more stable employment, but whether family firms are among the most likely candidates, especially in a downturn, is still an open question. We model firms’ employee firing and retention decisions and empirically examine the impact of a large negative shock (COVID-19 pandemic) on such decisions within the universe of family and nonfamily firms in Norway. We find that family wealth plays a significant role in determining whether family firms are less likely to fire employees. Consistent with our model, we find that firms owned by the wealthiest families do not provide higher employment protection, rather they show higher propensity to cut employment.