Striking parallels observed in the evolution of firm size and within-firm earnings distributions over time are documented. At the time of entry, the distribution of the whole sample and that of eventual survivors look similar, but the distribution of survivors subsequently shifts to the right. The left tails thins out while the right tail thickens, and the variance increases. While separate theories in industrial organization and labor literature are offered to account for this evidence, we demonstrate that it can be explained in a unified framework presented by noisy selection. In particular, we show explicitly that noisy selection implies the shift of the conditional distribution to the right because less efficient workers (firms) face higher hazard rates before their true efficiency is revealed with certainty.
Small Business Economics – Springer Journals
Published: Jul 30, 2009
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
All the latest content is available, no embargo periods.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud