On the Evolution of the Firm Size Distribution: Facts and Theory
35 Pages Posted: 27 Nov 2001
Date Written: November 2001
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 log-normal distribution. We also show that selection accounts for very little of this evolution. Instead, we propose a simple theory based on financing constraint. A calibrated version of our model does a good job at explaining the evolution of the firm size distribution.
Keywords: Firm growth, financing constraints, firm size distribution
JEL Classification: L00
Suggested Citation: Suggested Citation
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