American Economic Review Vol. 93 No. 4 2003

On the Evolution of the Firm Size Distribution: Facts and Theory

Luís Cabral¹; José Mata²

¹ Stern School of Business, New York University, 44 West Fourth Street, New York, NY 10012. · ² Universidade Nova de Lisboa, Rua Marquês de Fronteira 20, 1099-038 Lisboa, Portugal.

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.

DOI

10.1257/000282803769206205

Volume

93

Issue

4

Pages

1075-1090

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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