The authors are grateful to two anonymous referees and the editor Jonathan Temple for helpful comments on an earlier draft.
Testing for Conditional Convergence in Variance and Skewness: The Firm Size Distribution Revisited*
Article first published online: 18 JUL 2010
© Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2010
Oxford Bulletin of Economics and Statistics
Volume 72, Issue 5, pages 648–668, October 2010
How to Cite
Huber, P. and Pfaffermayr, M. (2010), Testing for Conditional Convergence in Variance and Skewness: The Firm Size Distribution Revisited. Oxford Bulletin of Economics and Statistics, 72: 648–668. doi: 10.1111/j.1468-0084.2010.00595.x
- Issue published online: 24 AUG 2010
- Article first published online: 18 JUL 2010
- Final Manuscript Received: January 2010
This article derives generalized method of moment-based Wald tests for conditional convergence in terms of the second and third central moments (conditional σ- and ζ-convergence). Monte Carlo simulations indicate that the proposed tests are properly sized and equipped with enough power for sample sizes in excess of 1,000 observations. We apply the Wald tests to a comprehensive sample of Austrian firms. The estimation results indicate a substantial reduction in both the second and third central moments of log firm size over time for the younger age cohorts. For older ones, the log-normal distribution is a valid description of their size distribution.