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Zipf's law in income distribution of companies

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  • Okuyama, K
  • Takayasu, M
  • Takayasu, H
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    Abstract

    Distribution functions of annual income of companies are analyzed based on two company databases. A clear power law distribution consistent with the Zipf's law can be confirmed for Japanese companies over more than three decades in income scale. Similar distributions can be confirmed in some other countries. It is confirmed that such power laws hold in most of job categories with slightly modified exponents. An annual income of a company is about two orders of magnitude smaller than its total assets, and the growth rate distribution of income is nearly independent of the income size in contrast to the case of growth rate of assets.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0378437199000862
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    Bibliographic Info

    Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

    Volume (Year): 269 (1999)
    Issue (Month): 1 ()
    Pages: 125-131

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    Handle: RePEc:eee:phsmap:v:269:y:1999:i:1:p:125-131

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    Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

    Related research

    Keywords: Zipf's law; Income distribution; Growth rate of assets;

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    Cited by:
    1. Xavier Gabaix, 2004. "Power laws and the origins of aggregate fluctuations," Econometric Society 2004 North American Summer Meetings 484, Econometric Society.
    2. Pasquale Cirillo & Mauro Gallegati, 2012. "The Empirical Validation of an Agent-based Model," Eastern Economic Journal, Palgrave Macmillan, vol. 38(4), pages 525-547.
    3. Metzig, Cornelia & Gordon, Mirta B., 2014. "A model for scaling in firms’ size and growth rate distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 398(C), pages 264-279.
    4. Watanabe, Hayafumi & Takayasu, Hideki & Takayasu, Misako, 2013. "Relations between allometric scalings and fluctuations in complex systems: The case of Japanese firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(4), pages 741-756.
    5. Taleb, Nassim N. & Tapiero, Charles S., 2010. "Risk externalities and too big to fail," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(17), pages 3503-3507.
    6. Lüders, Erik & Lüders-Amann, Inge & Schröder, Michael, 2004. "The Power Law and Dividend Yields," ZEW Discussion Papers 04-51, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. di Giovanni, Julian & Levchenko, Andrei A., 2013. "Firm entry, trade, and welfare in Zipf's world," Journal of International Economics, Elsevier, vol. 89(2), pages 283-296.
    8. Matteo Richiardi, 2006. "Toward a Non-Equilibrium Unemployment Theory," Computational Economics, Society for Computational Economics, vol. 27(1), pages 135-160, February.
    9. Hernández-Pérez, R., 2010. "An analogy of the size distribution of business firms with Bose–Einstein statistics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(18), pages 3837-3843.
    10. D. Delli Gatti & C. Di Guilmi & M. Gallegati & E. Gaffeo & G. Giulioni & A. Palestrini, 2008. "Scaling Laws In The Macroeconomy," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 131-138.
    11. Stanley, H.E. & Gabaix, Xavier & Gopikrishnan, Parameswaran & Plerou, Vasiliki, 2007. "Economic fluctuations and statistical physics: Quantifying extremely rare and less rare events in finance," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 382(1), pages 286-301.
    12. Giulio Bottazzi & Davide Pirino & Federico Tamagni, 2013. "Zipf Law and the Firm Size Distribution: a critical discussion of popular estimators," LEM Papers Series 2013/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    13. Segarra, Agustí & Teruel, Mercedes, 2012. "An appraisal of firm size distribution: Does sample size matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 314-328.
    14. Stanley, H. Eugene & Plerou, Vasiliki & Gabaix, Xavier, 2008. "A statistical physics view of financial fluctuations: Evidence for scaling and universality," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(15), pages 3967-3981.

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