Human capital and average firm size

Qingmiao Bi, Jing Hang and Mohan Zhou

Economics Letters, 2021, vol. 204, issue C

Abstract: This note embeds an O-ring production function of Kremer (1993) into the standard Lucas (1978) model of firm size distribution. We show that an increase in the stock of human capital can raise average firm size. Empirical evidence confirms this finding. These findings help explain the positive relationship between average firm size and development documented in the recent literature.

Keywords: Human capital; O-ring production; Average firm size (search for similar items in EconPapers)
JEL-codes: E24 L23 L25 O14 O33 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:204:y:2021:i:c:s016517652100197x

DOI: 10.1016/j.econlet.2021.109920

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