PublicationWorking paper

Working paper No. 158. When is Gibrat’s Law a Law?

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 effcient scale, market concentration rate, and number of young firms in the industry – matters for whether Gibrat’s law is rejected or not.

Related content: When is Gibrat’s Law a Law?

Daunfeldt, S-O., & Elert, N. (2010). When is Gibrat’s Law a Law? Ratio Working paper No. 158.

Details

Author: Daunfeldt, S-O., & Elert, N.
Publication year: 2010
Published in: When is Gibrat’s Law a Law?

Related

Associate Researcher
Sven-Olov Daunfeldt
+46702957284sven-olov.daunfeldt@huiresearch.se

Similar content

Working Paper No. 380. Artificial Intelligence, hiring and employment: Job postings evidence from Sweden.

Engberg, E., Hellsten, M., Javed, F., Lodefalk, M., Sabolová, R., Schroeder, S.

Publication year

2024

Published in

Ratio Working Paper Series.

Abstract

This paper investigates the impact of artificial intelligence (AI) on hiring and employment, using the universe of job postings published by the Swedish Public Employment Service from 2014-2022 and universal register data for Sweden. We construct a detailed measure of AI exposure according to occupational content and find that establishments exposed to AI are more likely to hire AI workers. Survey data further indicate that AI exposure aligns with greater use of AI services. Importantly, rather than displacing non-AI workers, AI exposure is positively associated with increased hiring for both AI and non-AI roles. In the absence of substantial productivity gains that might account for this increase, we interpret the positive link between AI exposure and non-AI hiring as evidence that establishments are using AI to augment existing roles and expand task capabilities, rather than to replace non-AI workers.

Health insurance premium changes and labor supply: Evidence from a low-income country

Publication year

Schroeder, S.

Published in

European Economic Review

Abstract

We study the effect of a health insurance premium policy change on labor supply. Using a matching with difference-in-differences strategy on pooled nationwide cross-sectional and panel data we find that both premium waivers and premium increases led to a reduction in labor supply by almost similar margins. We also show that the policy change reduced the probability of wage employment and increased domestic labor supply, pointing to potential income effect for waivers and potential manipulation effects for premium increases. Our results are robust to various specifications and raise concerns for the unintended effects of popular but likely inefficient community-based welfare targeting methods.

Article (with peer review)

Exporters, multinationals and residual wage inequality: Evidence and theory

Publication year

2025

Published in

European Economic Review

Abstract

A growing empirical literature underscores the pivotal role of ”global firms” in shaping labour market outcomes, including inequality. These are firms that participate in the international economy across multiple dimensions, including both trade and foreign direct investment (FDI). This prompts an important question: Is wage inequality among workers with similar characteristics primarily influenced by firms engaged solely in exporting, those involved solely in FDI, or by multinational enterprises (MNEs) that do both? Using linked employer–employee panel data for Germany, this paper unveils nuanced patterns in wage premia among various internationalising establishments, where I identify sorting between workers and establishments as a key driver. I interpret these patterns using a theoretical model that incorporates trade and FDI with monopolistic competition, wherein heterogeneous firms operate within frictional labour markets as they search for workers. My model gives rise to a novel channel for the MNE wage premium, stemming from their ability to transfer their human resource practices to their plant abroad.

Working paper No. 158. When is Gibrat's Law a Law? - Ratio