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Plant‐Level Analysis Using The Ard: Another Look At Gibrat'S Law

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  • Richard Harris
  • Mary Trainor

Abstract

This study uses the Annual Respondents Database to test whether Gibrat's law of proportionate effect holds for the UK manufacturing industry during the period 1973–1998. For a sample of manufacturing industries, four different panel unit root tests were carried out to test the relationship between growth and size for three measures of size: gross output, employment and gross value added. The tests were applied to unbalanced plant‐level panel data. The results show that there is strong evidence to reject Gibrat's law that firm growth is a random process in favour of the alternative proposition of mean reversion.

Suggested Citation

  • Richard Harris & Mary Trainor, 2005. "Plant‐Level Analysis Using The Ard: Another Look At Gibrat'S Law," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(3), pages 492-518, July.
    • Handle: RePEc:bla:scotjp:v:52:y:2005:i:3:p:492-518
    DOI: 10.1111/j.0036-9292.2005.00353.x
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    References listed on IDEAS

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    1. Geroski, Paul A, 1999. "The Growth of Firms in Theory and in Practice," CEPR Discussion Papers 2092, Centre for Economic Policy Research.
    2. P E Hart, 1998. "Job Generation in the UK Corporate Sector, 1986-95," National Institute of Economic and Social Research (NIESR) Discussion Papers 139, National Institute of Economic and Social Research.
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    Cited by:

    1. Giulio Cainelli & Massimiliano Mazzanti & Roberto Zoboli, 2011. "Environmentally oriented innovative strategies and firm performance in services. Micro-evidence from Italy," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 61-85.
    2. repec:uii:journl:v:4:y:2012:i:1:p:2-14 is not listed on IDEAS
    3. Ching-Fu Chang & Cherng-Shiun Lin, 2017. "The Role of Human Capital in Manufacturing Plant Growth: Evidence from Taiwan," Pacific Economic Review, Wiley Blackwell, vol. 22(4), pages 554-584, October.
    4. Massimiliano Mazzanti & Giulio Cainelli & Roberto Zoboli, 2008. "The Relationship Between Environmental Efficiency and Manufacturing Firm’s Growth," Working Papers 2008.99, Fondazione Eni Enrico Mattei.
    5. Zoltan Bakucs & Stefan Bojnec & Imre Fertő & Laure Latruffe, 2013. "Farm size and growth in field crop and dairy farms in France, Hungary and Slovenia," Post-Print hal-01208897, HAL.
    6. Richard Harris, 2011. "Models Of Regional Growth: Past, Present And Future," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 913-951, December.
    7. Giulio Cainelli & Massimiliano Mazzanti & Roberto Zoboli, 2013. "Environmental performance, manufacturing sectors and firm growth: structural factors and dynamic relationships," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(4), pages 367-387, October.
    8. Amara Mohamed, 2014. "Gibrat's Law and peer group effect: the case of Tunisian small manufacturing companies," Economics Bulletin, AccessEcon, vol. 34(1), pages 373-384.

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