FIRM SIZE, FIRM GROWTH, AND PERSISTENCE OF CHANCE - TESTING GIBRATS LAW WITH ESTABLISHMENT DATA FROM LOWER SAXONY, 1978-1989

Using data for some 7000 manufacturing establishments from Lower Saxony for 1978-1989 we tested for the validity of GIBRAT's Law of Proportionate Growth. We found that the law is only valid for very few groups of firms in some of the periods covered. However, we did not find that small firms grew systematically faster or slower than larger firms, or vice versa. On the other hand, we found 'persistence of chance' in the sense that a firm grows faster if it happened to grow faster in the past, too.