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Testing Gibrat's law in Italian macro-regions: Analysis on a panel of mechanical companies

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Abstract

The present paper deals with the question whether “Gibrat's law” is applicable to Italian mechanical companies active between 1997 and 1999 or not. The analysis was carried out at a spatial level splitting companies in four macro-regions: North-West, North-East, Centre and South. On the basis of a set of descriptive and inferential tools, we find that firm size, measured by total assets, follows approximately a log-normal distribution in at least two of the four analyzed macro-regions. Nevertheless log-normality is only one necessary but not sufficient condition for the validity of the Gibrat's law. Thus we analyzed the influence of firm size on growth rate finding a negative relation between the two variables in all macro-regions. This is a clear violation of Gibrat's law. Another violation was found by the application of an econometric model which evidences the persistence of growth.

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Authors and Affiliations

  1. Dipartimento di Scienze Economiche e Sociali, Università cattolica S. Cuore di Piacenza, Via Emilia Parmense, 29100, Piacenza, Italy

    P. Ganugi

  2. Dipartimento di Economia, Università di Parma, Via J.F. Kennedy, 43100, Parma, Italy

    L. Grossi & G. Gozzi

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  1. P. Ganugi
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  2. L. Grossi
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  3. G. Gozzi
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Ganugi, P., Grossi, L. & Gozzi, G. Testing Gibrat's law in Italian macro-regions: Analysis on a panel of mechanical companies. Statistical Methods & Applications 14, 101–126 (2005). https://doi.org/10.1007/BF02511577

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