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Entrepreneurs, Managers, and the Firm Size Distribution

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  • Yang Seung Lee

Abstract

Small firms can contribute to job creation and aggregate income. However, small firms are volatile and only a fraction of those can transition into larger firms, which create high-paying jobs. Entrepreneurs self-select for the transition. This study examines the pattern of entrepreneur self-selection. The main determinants of the self-selection are ability distribution of entrepreneurs and business environment, which represents skill distribution of laborers and social capital. This study predicts that firm-size distribution is truncated with the entrepreneur self-selection and aggregate income is larger when the business environment is better. This study contributes to the literature on firm-size distribution.

Suggested Citation

  • Yang Seung Lee, 2021. "Entrepreneurs, Managers, and the Firm Size Distribution," International Economic Journal, Taylor & Francis Journals, vol. 35(3), pages 367-390, July.
    • Handle: RePEc:taf:intecj:v:35:y:2021:i:3:p:367-390
    DOI: 10.1080/10168737.2021.1958896
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    Cited by:

    1. Jiancai Pi & Shuning Li, 2022. "Managerial Delegation and Wage Inequality," Annals of Economics and Finance, Society for AEF, vol. 23(1), pages 141-157, May.

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