American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
On the Evolution of the Firm Size Distribution: Facts and Theory
American Economic Review
vol. 93,
no. 4, September 2003
(pp. 1075–1090)
Abstract
Using a comprehensive data set of Portuguese manufacturing firms, we show that the firm size distribution is significantly right-skewed, evolving over time toward a lognormal distribution. We also show that selection accounts for very little of this evolution. Instead, we propose a simple theory based on financing constraints. A calibrated version of our model does a good job at explaining the evolution of the firm size distribution. (JEL L11)Citation
Cabral, Luís, M B, and José Mata. 2003. "On the Evolution of the Firm Size Distribution: Facts and Theory." American Economic Review 93 (4): 1075–1090. DOI: 10.1257/000282803769206205JEL Classification
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L60 Industry Studies: Manufacturing: General