IDEAS home Printed from https://ideas.repec.org/p/hit/cinwps/11.html
   My bibliography  Save this paper

Power Laws in Firm Productivity

Author

Listed:
  • Mizuno, Takayuki
  • Ishikawa, Atushi
  • Fujimoto, Shouji
  • Watanabe, Tsutomu

Abstract

We estimate firm productivity for about 3.2 million firms from 30 countries. We find that the distribution of firm productivity in each country, which is measured by total factor productivity (TFP), has a power law upper tail. However, the power law exponent of a TFP distribution in a country tends to be greater than that of a sales distribution in that country, indicating that the upper tail of a TFP distribution is less heavy compared to that of a sales distribution. We also find that the power law exponent of a TFP distribution tends to be greater than the power law exponents associated with the number of workers or tangible fixed assets. Given the idea that the sales of a firm is determined by the amount of various inputs employed by the firm (i.e., "production function" in the terminology of economics), these results suggest that the heavy tail of a sales distribution in a country comes not from the tail of a TFP distribution, but from the tail of the distribution of the number of workers or tangible fixed assets.

Suggested Citation

  • Mizuno, Takayuki & Ishikawa, Atushi & Fujimoto, Shouji & Watanabe, Tsutomu, 2011. "Power Laws in Firm Productivity," Working Paper Series 11, Center for Interfirm Network, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:cinwps:11
    as

    Download full text from publisher

    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/21180/ifn_wp011.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fujiwara, Yoshi & Di Guilmi, Corrado & Aoyama, Hideaki & Gallegati, Mauro & Souma, Wataru, 2004. "Do Pareto–Zipf and Gibrat laws hold true? An analysis with European firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 197-216.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Petra Štamfestová & Lukáš Sobíšek & Jiří Hnilica, 2023. "Firm Size Distribution in the Central European Context," Central European Business Review, Prague University of Economics and Business, vol. 2023(5), pages 151-175.
    2. Segarra, Agustí & Teruel, Mercedes, 2012. "An appraisal of firm size distribution: Does sample size matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 314-328.
    3. Lyócsa, Štefan & Výrost, Tomáš, 2018. "Scale-free distribution of firm-size distribution in emerging economies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 508(C), pages 501-505.
    4. Charles Boissel & Adrien Matray, 2021. "Dividend Taxes and the Allocation of Capital," Working Papers 2021-39, Princeton University. Economics Department..
    5. Massing, Till & Puente-Ajovín, Miguel & Ramos, Arturo, 2020. "On the parametric description of log-growth rates of cities’ sizes of four European countries and the USA," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 551(C).
    6. Keiichi Kishi, 2016. "Technology Diffusion, Pareto Distribution, and Patent Policy," Discussion Papers in Economics and Business 16-31, Osaka University, Graduate School of Economics.
    7. Musa, Hussam & Krištofík, Peter & Medzihorský, Juraj & Klieštik, Tomáš, 2024. "The development of firm size distribution – Evidence from four Central European countries," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 98-110.
    8. Stefano Battiston & Joao F. Rodrigues & Hamza Zeytinoglu, 2007. "The Network Of Inter-Regional Direct Investment Stocks Across Europe," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 29-51.
    9. Wang, Yuanjun & You, Shibing, 2016. "An alternative method for modeling the size distribution of top wealth," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 457(C), pages 443-453.
    10. Atushi Ishikawa, 2007. "Quasistatically varying log-normal distribution in the middle scale region of Japanese land prices," Papers 0710.1893, arXiv.org.
    11. Tamotsu Onozaki, 2018. "Nonlinearity, Bounded Rationality, and Heterogeneity," Springer Books, Springer, number 978-4-431-54971-0, March.
    12. Giuseppe Toscani, 2016. "Kinetic and mean field description of Gibrat's law," Papers 1606.04796, arXiv.org.
    13. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
    14. Atushi Ishikawa & Shouji Fujimoto & Takayuki Mizuno, 2021. "Why does production function take the Cobb–Douglas form?," Evolutionary and Institutional Economics Review, Springer, vol. 18(1), pages 79-102, April.
    15. Wright, Ian, 2009. "Implicit Microfoundations for Macroeconomics," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-27.
    16. Atushi Ishikawa & Takayuki Mizuno & Shouji Fujimoto, 2022. "Employee Number Dependence in Labor Productivity Distribution," The Review of Socionetwork Strategies, Springer, vol. 16(2), pages 465-477, October.
    17. Ramón Rufín & Cayetano Medina, 2008. "Market delimitation, firm survival and growth in service industries," The Service Industries Journal, Taylor & Francis Journals, vol. 30(9), pages 1401-1417, September.
    18. Atushi Ishikawa, 2007. "The log-normal distribution from Non-Gibrat's law in the middle scale region of profits," Papers 0705.1056, arXiv.org.
    19. Fujimoto, Shouji & Ishikawa, Atushi & Mizuno, Takayuki & Watanabe, Tsutomu, 2011. "A new method for measuring tail exponents of firm size distributions," Economics Discussion Papers 2011-29, Kiel Institute for the World Economy (IfW Kiel).
    20. Xavier Gabaix, 2009. "Power Laws in Economics and Finance," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 255-294, May.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hit:cinwps:11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Digital Resources Section, Hitotsubashi University Library (email available below). General contact details of provider: https://edirc.repec.org/data/cnhitjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.