Firm Size Distribution and Employment Fluctuations: Theory and Evidence

Research output: Contribution to journalArticle


We show that the firm-size distribution is an important determinant of the relationship between an industry's employment and output. A theoretical model predicts that changes in demand for an industry's output have larger effects on employment, resulting from adjustments at both the intensive and extensive margin, in industries characterised by a distribution that has a lower density of large firms. Industry-specific shape parameters of the firm size distributions are estimated using firm-level data from Germany, Sweden and the UK, and used to augment a relationship between industry-level employment and output. The empirical results align with the predictions of the theory.


  • Holger Görg
  • Philipp Henze
  • Viroj Jienwatcharamongkhol
  • Daniel Kopasker
  • Hassan Molana
  • Catia Montagna
  • Fredrik Sjöholm
External organisations
  • Research Institute of Industrial Economics
  • University of Kiel
  • Kiel Institute for the World Economy
  • University of Dundee
  • Scottish Institute for Research in Economics
  • University of Aberdeen
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Business Administration


  • firm distribution, firm size, employment, fluctuations
Original languageEnglish
Pages (from-to)690-703
JournalResearch in Economics
Issue number4
Publication statusPublished - 2017 Dec
Publication categoryResearch

Related research output

Holger Görg, Philipp Henze, Viroj Jienwatcharamongkhol, Daniel Kopasker, Hassan Molana, Catia Montagna & Fredrik Sjöholm, 2016 Nov 18, Lund: Department of Economics, Lund University, 35 p. (Working Papers; vol. 2016, no. 32).

Research output: Working paper

View all (1)