2017

Firm Size Distribution and Employment Fluctuations: Theory and Evidence

Reprint No. 2017:70

Author(s): Holger Görg, Philipp Henze, Viroj Jienwatcharamongkhol, Daniel Kopasker, Hassan Molana, Catia Montagna and Fredrik SjöholmYear: 2017 Title: Research in Economics Volume (No.): 71 (4) Pages: 690–703
Online article (restrictions may apply)

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


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.


Reference:
Görg, Holger, Philipp Henze, Viroj Jienwatcharamongkhol, Daniel Kopasker, Hassan Molana, Catia Montagna and Fredrik Sjöholm (2017), "Firm Size Distribution and Employment Fluctuations: Theory and Evidence". Research in Economics 71(4), 690–703.

Fredrik Sjöholm

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Interdisciplinary European Studies

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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