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Was Robert Gibrat right? A test based on the graphical model methodology

Author

Listed:
  • Marco Guerzoni

    (DEMS, Università di Milano-Bicocca, Milano, Italy - BETA, University of Strasbourg, France)

  • Luigi Riso

    (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy)

  • Marco Vivarelli

    (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)

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.

Suggested Citation

  • Marco Guerzoni & Luigi Riso & Marco Vivarelli, 2023. "Was Robert Gibrat right? A test based on the graphical model methodology," DISCE - Quaderni del Dipartimento di Politica Economica dipe0031, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    • Handle: RePEc:ctc:serie5:dipe0031
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    References listed on IDEAS

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    More about this item

    Keywords

    Gibrat’s Law; firm survival; market selection; firm growth;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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