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Studying Firm Growth Distributions with a Large Administrative Employment Database

Jay Dixon, Robert Petrunia and Anne-Marie Rollin

Abstract

This paper uses business tax administrative data to describe the annual firm growth rate distribution in Canada over the 2000–2009 period. This administrative tax database provides a unique lense to study firm growth as it allows us to look at the universe of Canadian employer firms and investigate the firm growth distribution across different dimensions. A non-normal, fat-tailed shape for the firm growth distributions holds across years, industries, regions, as well as firm size and age classes. The results show that the distributions of employment growth rates in Canada have more density in both the center and tails than a normal distribution. The evidence paints a picture of firm growth dynamics whereby most firms change very little each year, while a nontrivial amount also markedly grow or decline. A final finding is that young firms, aged four or less, represent a special case with an upwardly skewed distribution and a median growth rate greater than zero.

JEL Classification: L11

Acknowledgements

The majority of this work was completed while Jay Dixon was at Innovation, Science and Economic Development Canada.

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Knowledge based industries and information communications technologies industries

A

Knowledge based industries (NAICS code in brackets) include[28]: (i) Electric power generation, transmission and distribution (2211); (ii) Petroleum and coal product manufacturing (324); (iii) Chemical manufacturing (325); (iv) Ball and roller bearing manufacturing (332991); (v) Machinery manufacturing (333); (vi) Computer and electronic product manufacturing (334); (vi) Electrical equipment manufacturing (3353 and 3359); (vii) Motor vehicle electrical and electronic equipment manufacturing (33632); (viii) Aerospace Products and Parts Manufacturing (33641); (ix) Pipeline transportation (486); (x) Software Publishers (5112); (xi) Motion Picture and Video Production (5121 and 5191); (xii) Telecommunications (517); (xiii) Data processing, hosting, and related services (518); (xiv) Architectural, engineering and related services (5413); (xv) Computer systems design and related services (5415); (xvi) Environmental Consulting Services and Other Scientific and Technical Consulting Services (54162 and 54169); and (xvii) Research and development in the physical, engineering and life sciences (54171).

Information Communications Technologies industries include[29]: (i)computer and electronic product manufacturing (334); (ii) Computer and communications equipment and supplies merchant wholesalers (417); (iii) Sofware and video game publishers (511); (iv) Telecommunications (517); (v) Data processing, hosting and related services (518); (vi) Computer systems design and related services (541) and (vii) Electronic and precision equipment repair and maintenance (811).


This article is part of the special issue “Big Data” published in the Journal of Economics and Statistics. Access to further articles of this special issue can be obtained at www.degruyter.com/journals/jbnst.


Received: 2016-10-31
Revised: 2017-05-01
Accepted: 2018-02-02
Published Online: 2018-07-04
Published in Print: 2018-07-26

© 2018 Oldenbourg Wissenschaftsverlag GmbH, Published by De Gruyter Oldenbourg, Berlin/Boston