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Job creation and the intra-distribution dynamics of the firm size distribution

  • Peter Huber
  • Harald Oberhofer
  • Michael Pfaffermayr

Based on a three-equation model for initial firm size, survival, and firm growth we estimate firm-specific transition probabilities between size classes of the firm size distribution. This allows to analyze counterfactual scenarios that assess the impact of changes in exogenous variables on the intra-distribution dynamics of the firm size distribution. We find that a counterfactual decrease in average firm age increases the exit hazard of young firms, and at the same time reduces the probability of observing high-growth firms. An increase in the industry-wide entry rate and an increase in market growth, by contrast, have virtually no impact on the intra-distribution dynamics of the firm size distribution. Finally, a larger birth size increases the probability for the youngest and smallest firms to become high-growth firms. Copyright 2014 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

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Article provided by Oxford University Press in its journal Industrial and Corporate Change.

Volume (Year): 23 (2014)
Issue (Month): 1 (February)
Pages: 171-197

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Handle: RePEc:oup:indcch:v:23:y:2014:i:1:p:171-197
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