Scandinavian Working Papers in Economics
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No 45:
When is Gibrat's Law a Law?

Sven-Olov Daunfeldt () and Niklas Elert

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 firms in 5-digit NACE-industries in Sweden during 1998-2004. The results reject Gibrat's law on an aggregate level, since small firms grow faster than large firms. However, Gibrat's law is confirmed about as often as it is rejected when industry-specific regressions are estimated. It is also found that the industry context - e.g., minimum eó cient scale, market concentration rate, and number of young firms in the industry - matters for whether Gibrat's law is rejected or not.

Keywords: Firm growth; firm size; job creation; small firms; (follow links to similar papers)

JEL-Codes: L11; L25; L26; (follow links to similar papers)

38 pages, November 26, 2010

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This paper is published as:
Daunfeldt, Sven-Olov and Niklas Elert, (2013), 'When is Gibrat's Law a Law?', Small Business Economics, Vol. 41, June, No. 1, pages 133-147

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