Firm size distribution and employment fluctuations: Theory and evidence

Holger Görg, Philipp Henze, Viroj Jienwatcharamongkhol, Daniel Kopasker, Hassan Molana, Catia Montagna and Fredrik Sjöholm

Research in Economics, 2017, vol. 71, issue 4, 690-703

Abstract: We show that the firm-size distribution is an important determinant of the relationship between an industry's employment and output. A theoretical model predicts that changes in demand for an industry's output have larger effects on employment, resulting from adjustments at both the intensive and extensive margin, in industries characterised by a distribution that has a lower density of large firms. Industry-specific shape parameters of the firm size distributions are estimated using firm-level data from Germany, Sweden and the UK, and used to augment a relationship between industry-level employment and output. The empirical results align with the predictions of the theory.

Keywords: Firm distribution; Firm size; Employment; Fluctuations (search for similar items in EconPapers)
JEL-codes: E20 E23 L20 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Firm Size Distribution and Employment Fluctuations: Theory and Evidence (2016)
Working Paper: Firm Size Distribution and Employment Fluctuations: Theory and Evidence (2016)
Working Paper: Firm Size Distribution and Employment Fluctuations: Theory and Evidence (2016)
Working Paper: Firm size distribution and employment fluctuations: Theory and evidence (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:71:y:2017:i:4:p:690-703

DOI: 10.1016/j.rie.2017.09.002

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