Tuesday, June 25, 2013

Big firms employ a lot of people to produce a lot of goods and services.

From an article in The Economist:
In America the 2008 census showed that 981 firms with 10,000 or more staff account for a quarter of all jobs.......There is a fat tail of very big firms: the 100 largest had sales equivalent to 35% of GDP in 2009, up from 30% in the mid-1980s. Their performance is volatile: sales fluctuate by an average of 12% a year. And the correlations between firms are low, suggesting shocks are firm-specific rather than economywide. Next Mr Gabaix examines how well shocks involving these big firms explain changes in GDP. Very well, it turns out. Up to 48% of the volatility of American GDP can be traced to the performance of individual big firms.
There seems to be a focus on small and medium enterprises, but big firms may be more important than our public discourse would lead the average citizen to believe. 

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