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The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology

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  • POSCHKE, Markus

Abstract

How and why does the firm size distribution differ across countries? This paper documents that features of the firm size distribution are strongly associated with income per capita. Richer countries have fewer entrepreneurs and fewer small firms. The average, dispersion and skewness of firm size are all larger in richer countries. A simple general equilibrium model of occupational choice with skill-biased change in entrepreneurial technology calibrated to U.S. data can account very well for these patterns. The crucial assumption is that some entrepreneurs benefit more from technological progress than others. Marginal entrepreneurs then switch to becoming employees as technology advances.

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  • POSCHKE, Markus, 2011. "The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology," Cahiers de recherche 08-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    • Handle: RePEc:mtl:montec:08-2011
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    More about this item

    Keywords

    Occupational choice; entrepreneurship; firm size; skill-biased technical change;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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