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Gibrat’s law and quantile regressions: An application to firm growth

Roberta Distante, Ivan Petrella () and Emiliano Santoro ()

Economics Letters, 2018, vol. 164, issue C, 5-9

Abstract: The nexus between firm growth, size and age in U.S. manufacturing is examined through the lens of quantile regression models. This methodology allows us to overcome serious shortcomings entailed by linear regression models employed by much of the existing literature, unveiling a number of important properties. Size pushes both low and high performing firms towards the median rate of growth, while age is never advantageous, and more so as firms are relatively small and grow faster. These findings support theoretical generalizations of Gibrat’s law that allow size to affect the variance of the growth process, but not its mean (Cordoba, 2008).

Keywords: Firm growth; Size; Age; Conditional quantiles (search for similar items in EconPapers)
JEL-codes: D22 L11 C21 (search for similar items in EconPapers)
Date: 2018
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