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Industry Differences in the Firm Size Distribution

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    Abstract

    This paper empirically examines industry determinants of the shape of Swedish firm size distributions at the 3-digit (NACE) industry level between 1999-2004 for surviving firms. Recent theoretical studies have begun to develop a better understanding of the causal mechanisms behind the shape of firm size distributions. At the same time there is a growing need for more systematic empirical research. This paper therefore presents a two-stage empirical model, in which the shape parameters of the size distribution are estimated in a first stage, with firm size measured as number of employees. In a second stage regression analysis, a number of hypotheses regarding economic variables that may determine the distributional shape are tested. The result from the first step are largely consistent with previous statistical findings confirming a power law. The main finding, however, is that increases in industry capital and financial constraint exert a considerable influence on the size distribution, shaping it over time towards thinner tails, and hence fewer large firms.

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    File URL: http://ratio.se/sv/publikationer/working-papers/2013/no-214-industry-differences-in-the-firm-size-distribution.aspx
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    Bibliographic Info

    Paper provided by The Ratio Institute in its series Ratio Working Papers with number 214.

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    Length: 38 pages
    Date of creation: 21 Aug 2013
    Date of revision:
    Handle: RePEc:hhs:ratioi:0214

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    Keywords: Firm size distribution; Zipf's law; Gibrat's law;

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