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Average firm size has been increasing since 2012

23.04.2021

Economics in a picture: Average firm size has been increasing since 2012

The literature shows that the average size of portuguese firms, measured in terms of workers, has been decreasing since the mid 80s up until the end of the 2000s.  However, as can be inferred from the chart, since 2012 average size has been gradually increasing. Only a small fraction of this increase can be attributed to recomposition effects such as structural change in sectorial or demographic factors over time.

This evolution was accompanied by a shift of the size distribution of firms towards higher values which affected all size classes. The chart above shows that from 2010 to 2018 there was a decrease on the share of employment of the micro firms while that for the larger firms increased during the same period.

 

Further details in Special Issue – “The evolution of the average firm size in Portugal”, March 2021 Economic Bulletin (Banco de Portugal).

 

Prepared by Paulo Guimarães and Marta Silva. The analyses, opinions, and findings expressed above are those of the authors and do not necessarily coincide with those of Banco de Portugal or the Eurosystem.

 

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