When is Gibrats Law a Law?
Sven-Olov Daunfeld och Niklas Elert
November 26, 2010
Abstract: The purpose of this paper is to
investigate if the industry context matters for whether Gibrat's
law is rejected or not using a dataset that consists of all limited
…rms in 5-digit NACE-industries in Sweden during 1998-2004. The
results reject Gibrat's law on an aggregate level, since small …rms
grow faster than large …rms. However, Gibrat's law is con…rmed
about as often as it is rejected when industry-speci…c regressions
are estimated. It is also found that the industry context - e.g.,
minimum e¢ cient scale, market concentration rate, and number of
young …rms in the industry - matters for whether Gibrat's law is
rejected or not.
Keywords: Firm growth, …rm size, job creation,
small …rms
JEL-codes: D22, L11, L25, L26
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