Firm size and development

Hugo A. Hopenhayn

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Firm size increases with GDP per capita. The paper develops a simple framework to explore three alternative sources of variation that may explain this correlation: (1) excessive entry; (2) differences in the distribution of firm productivities; and (3) differences in returns to scale. The results show that all these sources of variation lead to substantial differences in firm size. GDP per capita is also significantly affected, but by an order of magnitude less. JEL classifications: O11, E13

Keywords: aggregate productivity; firm size distribution; firm dynamics; misallocation (search for similar items in EconPapers)
JEL-codes: E13 O11 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2016-10-01
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Published in Economía, 1, October, 2016, 17(1), pp. 27 - 49. ISSN: 1529-7470

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