Job creation and the intra-distribution dynamics of the firm size distribution

Peter Huber, Harald Oberhofer and Michael Pfaffermayr

Industrial and Corporate Change, 2014, vol. 23, issue 1, 171-197

Abstract: Based on a three-equation model for initial firm size, survival, and firm growth we estimate firm-specific transition probabilities between size classes of the firm size distribution. This allows to analyze counterfactual scenarios that assess the impact of changes in exogenous variables on the intra-distribution dynamics of the firm size distribution. We find that a counterfactual decrease in average firm age increases the exit hazard of young firms, and at the same time reduces the probability of observing high-growth firms. An increase in the industry-wide entry rate and an increase in market growth, by contrast, have virtually no impact on the intra-distribution dynamics of the firm size distribution. Finally, a larger birth size increases the probability for the youngest and smallest firms to become high-growth firms. Copyright 2014 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Date: 2014
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Related works:
Working Paper: Job Creation and the Intra-distribution Dynamics of the Firm Size Distribution (2012)
Working Paper: Job Creation and the Intra-distribution Dynamics of the Firm Size Distribution (2011)
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