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  3. American Economic Journal: Macroeconomics
  4. July 2018
  5. The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology

The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology

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Abstract

Development is associated with systematic changes in the firm size distribution. I document that the mean and dispersion of firm size are larger in rich countries, and increased over time for US firms. To analyze the firm size-development link, I construct a frictionless general equilibrium model of occupational choice with skill-biased change in entrepreneurial technology (i.e., technical progress favors better entrepreneurs). The model accounts for key aspects of the US experience with only changes in aggregate technology. It attributes half the variation in mean and dispersion of firm size across countries to technical change. Distortions also affect the size distribution.

Citation

Poschke, Markus. 2018. "The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology." American Economic Journal: Macroeconomics, 10 (3): 1-41. DOI: 10.1257/mac.20140181

Additional Materials

JEL Classification

  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • L11 Production, Pricing, and Market Structure; Size Distribution of Firms
  • L25 Firm Performance: Size, Diversification, and Scope
  • L26 Entrepreneurship
  • O33 Technological Change: Choices and Consequences; Diffusion Processes
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