Business Intelligence

Job Creation And The Intra-Distribution Dynamics Of The Firm Size Distribution

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Executive Summary

Based on a structural model for initial firm size, survival and firm growth the authors estimate firm-specific transition probabilities between size classes of the firm size distribution. This allows an assessment of the impact of different (counterfactual) economic policy measures on intra-distribution dynamics of the firm size distribution. They find that policies increasing the life span of firms reduce the exit hazard of young firms, but also reduce the probability to be a Gazelle. An increase in the industry-wide entry rate increases the exit hazards of incumbent firms and has no strong impact on the likelihood of firms to become Gazelles.

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