A new GLO Discussion Paper reconciles early and current literature testing Gibrat’s law.
GLO Discussion Paper No. 1248, 2023
The Law of Proportionate Effect: A test based on the graphical model methodology – Download PDF
by Guerzoni, Marco & Riso, Luigi & Vivarelli, Marco
GLO Fellow Marco Vivarelli
Author Abstract: Using both regression analysis and an unsupervised graphical model approach (never applied before to this issue), we confirm the rejection of the Gibrat’s law when our firm-level data are considered over the entire investigated period, while the opposite is true when we allow for market selection. Indeed, the growth behavior of the re-shaped (smaller) population of the survived most efficient firms is in line with the Law of Proportionate Effect; this evidence reconciles early and current literature testing Gibrat’s law and may have interesting implications in terms of both applied and theoretical research.
JUST PUBLISHED
Vol. 36, Issue 2, April 2023: Journal of Population Economics (JOPE) 16 articles.
https://link.springer.com/journal/148/volumes-and-issues/36-2
Vol. 36, Issue 1, January 2023: Journal of Population Economics (JOPE) 16 articles. https://link.springer.com/journal/148/volumes-and-issues/36-1
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