Stability and turbulence in the size distribution of firms: Evidence from Dutch manufacturing

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Abstract

This paper examines the shape of the firm size distribution over time and across sectors, using a longitudinal data set of manufacturing firms in the Netherlands in 1978-1998. Although the size distribution is highly skewed and resembles the Pareto law, a variety of patterns emerge across sectors, with the lognormal providing a better fit in some sectors. The size distribution and the underlying firm dynamics evolve over time. In the long term, the distribution has become less skewed and thinner at the tails, the slope of the Pareto law has declined, and mobility of firms at the lower tail has increased. In addition, the slope of the Pareto law tends to become steeper in correspondence with an economic recession, with peaks of mobility of firms at different size classes.
Original languageEnglish
Pages (from-to)255-272
Number of pages18
JournalInternational Review of Applied Economics
Volume20
Issue number2
DOIs
Publication statusPublished - 1 Apr 2006

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Keywords

  • Firm size

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