Gibrat’s law and legacy for non-profit organisations: a non-parametric analysis
Gibrat’s Law of proportional effect (i.e. growth is independent of initial size) has been tested for firms for several decades. In this paper I test Gibrat’s Law for charities in England and Wales through time. Using a data set based on the population of registered charities from 1998 to 2009, I am able to test the ‘ex ante’ hypothesis that Gibrat’s Law holds over the long run for a sample of charities as well as testing Gibrat’s Legacy (that Gibrat’s Law holds for large and mature organisations), the ‘ex post’ hypothesis. I use nonparametric local polynomial smoothing techniques which are more robust to the issues of autocorrelation, sample selection and truncation that make the conventional parametric approaches to testing Gibrat’s Law difficult in practice. Results suggest that the dynamic processes driving growth in the charitable sectors may differ from those driving the growth of firms. Unlike for-profit firms Gibrat’s Law is found to generally hold when controlling for selection both ‘ex ante’ and ‘ex post’. Results may be driven by the absence of a minimum efficient scale which charities must achieve to survive and the different funding profiles of charities.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Carrer del Tinent Coronel Valenzuela 1-11, 08034 Barcelona|
Phone: 93 403 46 46
Fax: 93 403 98 32
Web page: http://www.ieb.ub.edu
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephen P. Jenkins & Philippe Van Kerm, 2006.
"Trends in income inequality, pro-poor income growth, and income mobility,"
Oxford Economic Papers,
Oxford University Press, vol. 58(3), pages 531-548, July.
- Jenkins, Stephen P. & Van Kerm, Philippe, 2003. "Trends in income inequality, pro-poor income growth and income mobility," IRISS Working Paper Series 2003-11, IRISS at CEPS/INSTEAD.
- Stephen P. Jenkins & Philippe VanKerm, 2003. "Trends in Income Inequality, Pro-Poor Income Growth and Income Mobility," Discussion Papers of DIW Berlin 377, DIW Berlin, German Institute for Economic Research.
- Jenkins, Stephen P. & Van Kerm, Philippe, 2003. "Trends in Income Inequality, Pro-Poor Income Growth and Income Mobility," IZA Discussion Papers 904, Institute for the Study of Labor (IZA).
- Jenkins, Stephen P. & Van Kerm, Philippe, 2003. "Trends in income inequality, pro-poor income growth and income mobility," ISER Working Paper Series 2003-27, Institute for Social and Economic Research.
- Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2009. "Defending Gibrat’s Law as a long-run regularity," Small Business Economics, Springer, vol. 32(1), pages 31-44, January.
- Lotti, Francesca & Santarelli, Enrico & Vivarelli, Marco, 2007. "Defending Gibrat’s Law as a Long-Run Regularity," IZA Discussion Papers 2744, Institute for the Study of Labor (IZA).
- Chesher, Andrew, 1979. "Testing the Law of Proportionate Effect," Journal of Industrial Economics, Wiley Blackwell, vol. 27(4), pages 403-411, June.
- D.B. Audretsch & L. Klomp & E. Santarelli & A.R. Thurik, 2004. "Gibrat's Law: Are the Services Different?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(3), pages 301-324, 05.
- Audretsch, D.B. & Klomp, L. & Thurik, A.R., 2002. "Gibrat's Law: are the services different?," ERIM Report Series Research in Management ERS-2002-04-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
- Roy Thurik & Enrico Santarelli & David Audretsch & Luuk Klomp, 2002. "Gibrat's Law: Are the Services Different?," Scales Research Reports H200201, EIM Business and Policy Research.
- Richard Steinberg, 1986. "The Revealed Objective Functions of Nonprofit Firms," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 508-526, Winter.
- Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
- Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1989. "The Growth and Failure of U. S. Manufacturing Plants," The Quarterly Journal of Economics, Oxford University Press, vol. 104(4), pages 671-698.
- Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "The Growth And Failure Of U.S. Manufacturing Plants," Papers 1-87-5, Pennsylvania State - Department of Economics.
- Harrison Teresa D. & Laincz Christopher A, 2008. "Entry and Exit in the Nonprofit Sector," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-42, July.
- Rafael GonzÃ¡lez-Val, 2012. "A Nonparametric Estimation of the Local Zipf Exponent for all US Cities," Environment and Planning B, , vol. 39(6), pages 1119-1130, December.
- Rafael GonzÃ¡lez-Val, 2012. "A nonparametric estimation of the local Zipf exponent for all US cities," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 39(6), pages 1119-1130, November.
- González-Val, Rafael, 2010. "A Nonparametric Estimation of the Local Zipf Exponent for all US Cities," MPRA Paper 26720, University Library of Munich, Germany.
- José Fariñas & Lourdes Moreno, 2000. "Firms' Growth, Size and Age: A Nonparametric Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(3), pages 249-265, November. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ieb:wpaper:2012/4/doc2012-8. 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: ()
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.