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Growth and size of firms
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DP77Authors
External Authors
Hart, Peter E
Related Themes
Productivity, Trade, and Regional EconomiesJEL Code
L11, J23
Paper Category Number
77
We use a dataset of 87,ooo independent UK companies to investigate the relationship between firm size and growth. For the sample as a whole, a Galton-Markov model of regression towards the mean shows that growth is negatively related to initial size. However, when the sample is broken down by size group, we find that regression towards the mean only occurs for the smallest firms, e.g. those with eight employees or less. For larger firms, there is essentially no relationship between growth and size. Even for the smallest firm, our results may be due to transitory factors.
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