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An analysis of the size distribution of Italian firms by age

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  • Cirillo, Pasquale
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    Abstract

    In this paper we analyze the size distribution of Italian firms by age. In other words, we want to establish whether the way that the size of firms is distributed varies as firms become old. As a proxy of size we use capital. In [L.M.B. Cabral, J. Mata, On the evolution of the firm size distribution: Facts and theory, American Economic Review 93 (2003) 1075–1090], the authors study the distribution of Portuguese firms and they find out that, while the size distribution of all firms is fairly stable over time, the distributions of firms by age groups are appreciably different. In particular, as the age of the firms increases, their size distribution on the log scale shifts to the right, the left tails becomes thinner and the right tail thicker, with a clear decrease of the skewness. In this paper, we perform a similar analysis with Italian firms using the CEBI database, also considering firms’ growth rates. Although there are several papers dealing with Italian firms and their size distribution, to our knowledge a similar study concerning size and age has not been performed yet for Italy, especially with such a big panel.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0378437109008267
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    Bibliographic Info

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

    Volume (Year): 389 (2010)
    Issue (Month): 3 ()
    Pages: 459-466

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    Handle: RePEc:eee:phsmap:v:389:y:2010:i:3:p:459-466

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

    Related research

    Keywords: Firms’ size distribution; Firms’ age; Growth rates; Generalized Beta distribution of the second kind; Singh–Maddala distribution; Log-logistic distribution; Gibrat’s law;

    References

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    1. McDonald, James B, 1984. "Some Generalized Functions for the Size Distribution of Income," Econometrica, Econometric Society, vol. 52(3), pages 647-63, May.
    2. Giulio Bottazzi & Angelo Secchi, 2006. "Explaining the distribution of firm growth rates," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 235-256, 06.
    3. F. Clementi & T. Di Matteo & M. Gallegati & G. Kaniadakis, 2007. "The k-generalized distribution: A new descriptive model for the size distribution of incomes," Papers 0710.3645, arXiv.org, revised Jan 2008.
    4. Bottazzi, Giulio, 2009. "On the irreconcilability of Pareto and Gibrat laws," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 388(7), pages 1133-1136.
    5. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-70, September.
    6. Lu�s M B Cabral & Jos� Mata, 2003. "On the Evolution of the Firm Size Distribution: Facts and Theory," American Economic Review, American Economic Association, vol. 93(4), pages 1075-1090, September.
    7. Giulio Bottazzi & Elena Cefis & Giovanni Dosi, 2001. "Corporate Growth and Industrial Structure. Some Evidence from the Italian Manufacturing Industry," LEM Papers Series 2001/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. L. A. N. Amaral & S. V. Buldyrev & S. Havlin & H. Leschhorn & P. Maass & M. A. Salinger & H. E. Stanley & M. H. R. Stanley, 1997. "Scaling behavior in economics: I. Empirical results for company growth," Papers cond-mat/9702082, arXiv.org.
    9. Paolo Angelini & Andrea Generale, 2008. "On the Evolution of Firm Size Distributions," American Economic Review, American Economic Association, vol. 98(1), pages 426-38, March.
    10. Esteban, Joan M, 1986. "Income-Share Elasticity and the Size Distribution of Income," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 439-44, June.
    11. L. Crosato & P. Ganugi, 2007. "Statistical regularity of firm size distribution: the Pareto IV and truncated Yule for Italian SCI manufacturing," Statistical Methods and Applications, Springer, vol. 16(1), pages 85-115, June.
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    Cited by:
    1. Erlingsson, Einar Jón & Alfarano, Simone & Raberto, Marco & Stefánsson, Hlynur, 2012. "On the distributional properties of size, pro fit and growth of Icelandic firms," MPRA Paper 35857, University Library of Munich, Germany.
    2. Alex Coad & Agustí Segarra & Mercedes Teruel, 2010. "Like milk or wine: Does firm performance improve with age?," Papers on Economics and Evolution 2010-06, Max Planck Institute of Economics, Evolutionary Economics Group.
    3. 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.

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