IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v26y2006i2p117-123.html
   My bibliography  Save this article

Testing Gibrat’s Law for Small, Young and Innovating Firms

Author

Listed:
  • José Calvo

    ()

Abstract

This article analyses whether small, young, and innovating firms have experienced a greater employment growth than other Spanish firms over the period 1990–2000. The study draws upon a sample of 1272 manufacturing firms in which only 967 of the firms survived for the entire ten year period. The analyses test Gibrat’s law, both by least squares and by utilizing the procedure proposed by Heckman in which a probit survival equation is first estimated to correct for sample selection bias. Two estimators correcting for selection bias are utilized: one that incorporates the inverse Mill’s ratio and the other that employs maximum likelihood methods. All the results reject Gibrat’s law and support the proposition that small firms have grown larger. Additionally, the results show that old firms grow less than young ones, and innovating activity – both process and product – is a strong positive factor in the firm’s survival and its employment growth. Copyright Springer 2006

Suggested Citation

  • José Calvo, 2006. "Testing Gibrat’s Law for Small, Young and Innovating Firms," Small Business Economics, Springer, vol. 26(2), pages 117-123, March.
  • Handle: RePEc:kap:sbusec:v:26:y:2006:i:2:p:117-123
    DOI: 10.1007/s11187-004-2135-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11187-004-2135-5
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    L11; L25;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:26:y:2006:i:2:p:117-123. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.