Working Papers, Department of Economics, Lund University
Firm Size Distribution and Employment Fluctuations: Theory and Evidence
(), Philipp Henze
(), Viroj Jienwatcharamongkhol
(), Daniel Kopasker
(), Hassan Molana
(), Catia Montagna
() and Fredrik Sjöholm
Abstract: This paper studies the effect of the firm-size
distribution on the relationship between employment and output. We
construct a theoretical model, which predicts that changes in demand for
industry output have larger effects on employment in industries
characterised by a distribution that is more skewed towards smaller 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. Our
empirical results align with the predictions of the theory and confirm that
the size distribution of firms is an important determinant of the
relationship between changes in output and employment.
Keywords: Firm distribution; Firm size; Employment; Fluctuations; (follow links to similar papers)
JEL-Codes: E20; E23; L20; (follow links to similar papers)
35 pages, November 18, 2016
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