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 language | English |
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Pages (from-to) | 690-703 |
Number of pages | 14 |
Journal | Research in Economics |
Volume | 71 |
Issue number | 4 |
Early online date | 18 Sept 2017 |
DOIs | |
Publication status | Published - Dec 2017 |
Bibliographical note
We thank an anonymous referee and Federico Etro for helpful commentsand 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.
Keywords
- firm distribution
- firm size
- employment
- fluctuations
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Catia Montagna
- Business School, Africa-Asia Centre for Sustainability (AACS)
- Business School, Centre for Governance, Accountability, and Sustainability (GAS)
- Business School, Economics - Jaffrey Chair of Political Economy
- Centre for Energy Transition
- Business School, Aberdeen Centre for Research in Energy Economics and Finance (ACREEF)
- Business School, Centre for Labour Market Research (CeLMR)
Person: Academic