Skip to main content
SpringerLink
Log in

Does Gibrat's Law hold among young, small firms?

  • Original Paper
  • Published:
Journal of Evolutionary Economics Aims and scope Submit manuscript

Abstract.

According to Gibrat's Law of Proportionate Effect, the growth rate of a given firm is independent of its size at the beginning of the examined period. Aimed at extending this line of investigation, the present paper uses quantile regression techniques to test whether Gibrat's Law holds for new entrants in a given industry: that is for new small firms in the early stage of their life cycle. The main finding is that for some selected industries in Italian manufacturing Gibrat's Law fails to hold in the years immediately following start-up, when smaller firms have to rush in order to achieve a size large enough to enhance their likelihood of survival. Conversely, in subsequent years the patterns of growth of new smaller firms do not differ significantly from those of larger entrants, and the Law therefore cannot be rejected.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Author information

Authors and Affiliations

  1. Research Department, Bank of Italy, Via Nazionale, 91, 00184, Roma, Italy

    Francesca Lotti

  2. Department of Economics, University of Bologna, Strada Maggiore, 45, 40125, Bologna, Italy

    Enrico Santarelli

  3. Department of Economics and Social Sciences, Catholic University of Piacenza, Via Emilia Parmense, 84, 29100, Piacenza, Italy

    Marco Vivarelli

  4. Department of Economics and Social Sciences, International Labour Office, Geneva, Switzerland

    Marco Vivarelli

  5. Department of Economics and Social Sciences, IZA, Bonn, Germany

    Marco Vivarelli

Authors
  1. Francesca Lotti
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Enrico Santarelli
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Marco Vivarelli
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Enrico Santarelli.

Additional information

JEL Classification:

L11, L60

Previous versions of this paper were presented at the 27th Annual EARIE Conference (Lausanne, 7-10 September 2000) and at seminars held between 2000 and 2003 at the Economics Department of Harvard University, the Catholic University of Milan, the University of Ferrara, the University of Bologna, the Bank of Italy, and Athens University of Economics & Business. We would like to thank Carlo Bianchi, Giuseppe Colangelo, Giovanni Dosi, Steven Klepper (Editor), Stephen Martin, Ariel Pakes, Aman Ullah and, in particular, Helen Louri and two anonymous referees for their valuable comments on earlier drafts. Financial support from MIUR (Year 2000; protocol #MM13038538_001; project leader: E. Santarelli) is gratefully acknowledged.

Correspondence to: E. Santarelly

Rights and permissions

Reprints and permissions

About this article

Cite this article

Lotti, F., Santarelli, E. & Vivarelli, M. Does Gibrat's Law hold among young, small firms?. J. Evol. Econ. 13, 213–235 (2003). https://doi.org/10.1007/s00191-003-0153-0

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00191-003-0153-0

Keywords:

Search

Navigation