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The average firm size increases with its age class

20.08.2021

Economics in a picture: The average firm size increases with its age class

 

It is a known fact that the average size of Portuguese firms, measured in terms of workers, has been increasing since 2012. However, the average size masks a substantial amount of heterogeneity from a variety of factors that contribute to differences in the size of the firms. Firm age is one of those factors.

 

Recently created firms have the smallest average size, around 40% of the average size computed for all firms. Over time, firms tend to increase in size. For the period under analysis, the more mature firms with 20 or more years in the market were precisely those who experienced the largest increase in terms of workers. 

 

 

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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