Firm Size Distribution and Employment Fluctuations: Theory and Evidence

Holger Gorg, Philipp Henze, Viroj Jienwatcharamongkhol, Daniel Kopasker, Hassan Molana, Catia Montagna, Fredrik Sjöholm

Research output: Contribution to journalArticle

1 Citation (Scopus)
5 Downloads (Pure)

Abstract

We show that the firm-size distribution is an important determinant of the relationship between an industry’s employment and output. A theoretical model predicts that changes in demand for an industry’s output have larger effects on employment, resulting from adjustments at both the intensive and extensive margin, in industries characterised by a distribution that has a lower density of large firms. Industry-specific shape parameters of the firm size distributions are estimated using firm-level data from Germany, Sweden and the UK, and used to augment a relationship between industry-level employment and output. The empirical results align with the predictions of the theory.
Original languageEnglish
Pages (from-to)690-703
Number of pages14
JournalResearch in Economics
Volume71
Issue number4
Early online date18 Sep 2017
DOIs
Publication statusPublished - Dec 2017

Fingerprint

Firm size distribution
Fluctuations
Industry
Prediction
Empirical results
Intensive margin
Sweden
Large firms
Germany
Firm-level data
Extensive margin

Keywords

  • firm distribution
  • firm size
  • employment
  • fluctuations

Cite this

Firm Size Distribution and Employment Fluctuations : Theory and Evidence. / Gorg, Holger; Henze, Philipp; Jienwatcharamongkhol, Viroj; Kopasker, Daniel; Molana, Hassan; Montagna, Catia; Sjöholm, Fredrik.

In: Research in Economics, Vol. 71, No. 4, 12.2017, p. 690-703.

Research output: Contribution to journalArticle

Gorg, Holger ; Henze, Philipp ; Jienwatcharamongkhol, Viroj ; Kopasker, Daniel ; Molana, Hassan ; Montagna, Catia ; Sjöholm, Fredrik. / Firm Size Distribution and Employment Fluctuations : Theory and Evidence. In: Research in Economics. 2017 ; Vol. 71, No. 4. pp. 690-703.
@article{ad6c997638be44b8919ec10273675237,
title = "Firm Size Distribution and Employment Fluctuations: Theory and Evidence",
abstract = "We show that the firm-size distribution is an important determinant of the relationship between an industry’s employment and output. A theoretical model predicts that changes in demand for an industry’s output have larger effects on employment, resulting from adjustments at both the intensive and extensive margin, in industries characterised by a distribution that has a lower density of large firms. Industry-specific shape parameters of the firm size distributions are estimated using firm-level data from Germany, Sweden and the UK, and used to augment a relationship between industry-level employment and output. The empirical results align with the predictions of the theory.",
keywords = "firm distribution, firm size, employment, fluctuations",
author = "Holger Gorg and Philipp Henze and Viroj Jienwatcharamongkhol and Daniel Kopasker and Hassan Molana and Catia Montagna and Fredrik Sj{\"o}holm",
note = "We thank an anonymous referee and Federico Etro for helpful comments and suggestions. This research was supported by the NORFACE ERA-NET (New Opportunities for Research Funding Agency Co-operation in Europe Network) Welfare State Futures Programme, Grant Number 462-14-120. We gratefully acknowledge the professional assistance of UK Data Service, http://doc.ukdataservice.ac.uk/doc/6644/mrdoc/UKDA/UKDA _Study_6644_Information.htm. The usual disclaimer applies.",
year = "2017",
month = "12",
doi = "10.1016/j.rie.2017.09.002",
language = "English",
volume = "71",
pages = "690--703",
journal = "Research in Economics",
issn = "1090-9443",
publisher = "Academic Press Inc.",
number = "4",

}

TY - JOUR

T1 - Firm Size Distribution and Employment Fluctuations

T2 - Theory and Evidence

AU - Gorg, Holger

AU - Henze, Philipp

AU - Jienwatcharamongkhol, Viroj

AU - Kopasker, Daniel

AU - Molana, Hassan

AU - Montagna, Catia

AU - Sjöholm, Fredrik

N1 - We thank an anonymous referee and Federico Etro for helpful comments and suggestions. This research was supported by the NORFACE ERA-NET (New Opportunities for Research Funding Agency Co-operation in Europe Network) Welfare State Futures Programme, Grant Number 462-14-120. We gratefully acknowledge the professional assistance of UK Data Service, http://doc.ukdataservice.ac.uk/doc/6644/mrdoc/UKDA/UKDA _Study_6644_Information.htm. The usual disclaimer applies.

PY - 2017/12

Y1 - 2017/12

N2 - We show that the firm-size distribution is an important determinant of the relationship between an industry’s employment and output. A theoretical model predicts that changes in demand for an industry’s output have larger effects on employment, resulting from adjustments at both the intensive and extensive margin, in industries characterised by a distribution that has a lower density of large firms. Industry-specific shape parameters of the firm size distributions are estimated using firm-level data from Germany, Sweden and the UK, and used to augment a relationship between industry-level employment and output. The empirical results align with the predictions of the theory.

AB - We show that the firm-size distribution is an important determinant of the relationship between an industry’s employment and output. A theoretical model predicts that changes in demand for an industry’s output have larger effects on employment, resulting from adjustments at both the intensive and extensive margin, in industries characterised by a distribution that has a lower density of large firms. Industry-specific shape parameters of the firm size distributions are estimated using firm-level data from Germany, Sweden and the UK, and used to augment a relationship between industry-level employment and output. The empirical results align with the predictions of the theory.

KW - firm distribution

KW - firm size

KW - employment

KW - fluctuations

U2 - 10.1016/j.rie.2017.09.002

DO - 10.1016/j.rie.2017.09.002

M3 - Article

VL - 71

SP - 690

EP - 703

JO - Research in Economics

JF - Research in Economics

SN - 1090-9443

IS - 4

ER -