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Power-Law and Log-Normal Distributions in Temporal Changes of Firm-Size Variables

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  • Ishikawa, Atushi

Abstract

In this paper the author shows that signed temporal changes of firm size variables follow the power-law for large changes; while, for middle changes a log-normal distribution is found. In the analyses, the author employed three databases: highincome data, high-sales data and positive-profits data of Japanese firms. It is particularly worth noting that the growth rate distributions in temporal changes of the firm size data have no wide tail, unlike the distributions observed in assets and sales of firms, the number of employees and personal income data. An Extended-Gibrat's Law was also found in the growth rate distributions of temporal changes of firm size variables, which induces both the power-law and the log-normal distributions in the temporal changes of firm size under the Detailed Balance.

Suggested Citation

  • Ishikawa, Atushi, 2009. "Power-Law and Log-Normal Distributions in Temporal Changes of Firm-Size Variables," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-25.
    • Handle: RePEc:zbw:ifweej:7597
    DOI: 10.5018/economics-ejournal.ja.2009-11
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    References listed on IDEAS

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    1. Fujiwara, Yoshi & Di Guilmi, Corrado & Aoyama, Hideaki & Gallegati, Mauro & Souma, Wataru, 2004. "Do Pareto–Zipf and Gibrat laws hold true? An analysis with European firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 197-216.
    2. Xavier Gabaix, 2011. "The Granular Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 79(3), pages 733-772, May.
    3. Ishikawa, Atushi, 2006. "Annual change of Pareto index dynamically deduced from the law of detailed quasi-balance," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 371(2), pages 525-535.
    4. Ishikawa, Atushi, 2006. "Derivation of the distribution from extended Gibrat's law," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 367(C), pages 425-434.
    5. Atushi Ishikawa, 2007. "Quasistatically varying log-normal distribution in the middle scale region of Japanese land prices," Papers 0710.1893, arXiv.org.
    6. Kaushik Matia & Dongfeng Fu & Sergey V. Buldyrev & Fabio Pammolli & Massimo Riccaboni & H. Eugene Stanley, 2005. "Statistical Properties of Business Firms Structure and Growth," Papers physics/0502081, arXiv.org.
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    Cited by:

    1. Junho Na & Jeong-dong Lee & Chulwoo Baek, 2017. "Is the service sector different in size heterogeneity?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 95-120, April.
    2. Williams, Michael A. & Baek, Grace & Park, Leslie Y. & Zhao, Wei, 2016. "Global evidence on the distribution of economic profit rates," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 458(C), pages 356-363.
    3. Gualandi, Stefano & Toscani, Giuseppe, 2018. "Pareto tails in socio-economic phenomena: A kinetic description," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-17.

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    More about this item

    Keywords

    Econophysics; temporal change of firm size; Pareto's law; log-normal distribution; (non-)Gibrat's law; detailed balance;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D39 - Microeconomics - - Distribution - - - Other

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