Box-cox quantile regression and the distribution of firm sizes

Using the Box-Cox quantile regression model, we analyse the size distributi on of firms in Portuguese manufacturing during the 1980s. Specifically, we estimate the effect of selected industry attributes on the location, scale, skewness and kurtosis of the conditional size distributions of firms. We f ind that industry attributes affect the size of firms in the same direction across the distribution, but the effects of these variables are typically much greater at the largest quantiles. Over time the distribution shifted t owards smaller firms, due mainly to the way the economy responds to industr y characteristics rather than to changes of the level of these characterist ics. The prediction of lognormality, implied by Gibrat's Law, is soundly re jected by the observed distribution of firm sizes. However, we found that, at least in 1983, lognormality is a reasonable description of the condition al size distribution. Copyright (C) 2000 John Wiley & Sons, Ltd.