On the Evolution of the Firm Size Distribution: Facts and Theory
Using a comprehensive data set of Portuguese manufacturing firms, we show that the firm size distribution is significantly right-skewed, evolving over time toward a lognormal distribution. We also show that selection accounts for very little of this evolution. Instead, we propose a simple theory based on financing constraints. A calibrated version of our model does a good job at explaining the evolution of the firm size distribution. (JEL L11)
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Volume (Year): 93 (2003)
Issue (Month): 4 (September)
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