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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