On the evolution of the firm size distribution: Facts and theory

Luís M B Cabral, José Mata

Research output: Contribution to journalArticle

409 Citations (Scopus)

Abstract

Using a comprehensive data set of Portuguese manufacturing firms, we show that the firm size distribution is significantly right-skewed, evolving over time toward a lognormal distribution. We also show that selection accounts for very little of this evolution. Instead, we propose a simple theory based on financing constraints. A calibrated version of our model does a good job at explaining the evolution of the firm size distribution.

Original languageEnglish
Pages (from-to)1075-1090
Number of pages16
JournalAmerican Economic Review
Volume93
Issue number4
DOIs
Publication statusPublished - Sep 2003

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