The U.S. establishment-size distribution: secular changes and sectoral decomposition

Establishment heterogeneity has been modeled in economics at least since the seminal work of Lucas (1978). More recently, this feature has been incorporated into calibrated models to provide quantitative evaluations of different mechanisms. This article aims to contribute to this literature by providing a set of facts about the establishment-size distribution since the 1970s that may be used to calibrate and test the predictions of these models. First, this article analyzes establishment data from 1974-2006. During this period, the number of workers (size) of a "representative establishment" is relatively constant. Next, the analysis turns to the dispersion of establishment sizes. The size distribution of establishments has become slightly more even. This article considers whether trends in the firm-size distribution resemble those found in establishments. They are similar, although labor became slightly more concentrated in large firms. The authors' article extends their analysis by studying changes in the size distribution of manufacturing and service establishments over time.