The National Bank of Denmark published a working paper using Danish administrative microdata on firms aged 0–65 to examine how firm size relates to firm age. While cross-sectional results show average firm size increasing with age, panel-based analysis finds size rises with age only for the first 10–15 years and then falls. Using fixed-effects estimation and a partial identification approach to the age-period-cohort problem, the paper points to sample composition as an important driver of cross-sectional patterns. It reports significant differences in exit rates by firm size, strong cohort effects for firms entering in the late 1950s, and evidence that exit rates are not monotonically decreasing with age.
National Bank of Denmark 2025-09-10
National Bank of Denmark working paper finds firm size grows only in the first 10–15 years of a firm’s life before declining
The National Bank of Denmark's working paper, utilizing Danish administrative microdata, reveals that firm size increases with age only for the first 10–15 years before declining, with significant differences in exit rates by firm size and strong cohort effects for firms entering in the late 1950s. The study highlights sample composition as a key factor in cross-sectional patterns and notes that exit rates do not consistently decrease with age.