Was Robert Gibrat Right? A Test Based on the Graphical Model Methodology

Marco Guerzoni, Luigi Riso and Marco Vivarelli ()
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Marco Guerzoni: Università degli Studi di Milano-Bicocca

No 15995, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using both regression analysis and an unsupervised graphical model approach (never applied before to this issue), we confirm the rejection of the Gibrat's law when our firm-level data are considered over the entire investigated period, while the opposite is true when we allow for market selection. Indeed, the growth behavior of the re-shaped (smaller) population of the survived most efficient firms is in line with the Law of Proportionate Effect; this evidence reconciles early and current literature testing Gibrat's law and may have interesting implications in terms of both applied and theoretical research.

Keywords: market selection; firm survival; Gibrat's Law; firm growth (search for similar items in EconPapers)
JEL-codes: L11 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2023-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-hpe and nep-tid
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Published - published online in: Small Business Economics, 04 April 2024

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Journal Article: Was Robert Gibrat right? A test based on the graphical model methodology (2025)
Working Paper: Was Robert Gibrat right? A test based on the graphical model methodology (2023)
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