Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/89283 
Year of Publication: 
2013
Series/Report no.: 
LEM Working Paper Series No. 2013/17
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
Abstract: 
The upper tail of the firm size distribution is often assumed to follows a Power Law behavior. Recently, using different estimators and on different data sets, several papers conclude that this distribution follows the Zipf Law, that is that the fraction of firms whose size is above a given value is inversely proportional to the value itself. We compare the different methods through which this conclusion has been reached. We find that the family of estimators most widely adopted, based on an OLS regression, is in fact unreliable and basically useless for appropriate inference. This finding rises some doubts about previously identified Zipf Laws. In general, when individual observations are available, we recommend the adoption of the Hill estimator over any other method.
Subjects: 
Firm size distribution
Zipf Law
Power-like distribution
JEL: 
L11
C15
C46
D20
Document Type: 
Working Paper

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