On the Evolution of the Firm Size Distribution: Facts and Theory
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- 1 August 2003
- journal article
- research article
- Published by American Economic Association in American Economic Review
- Vol. 93 (4) , 1075-1090
- https://doi.org/10.1257/000282803769206205
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)Keywords
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