Pareto index induced from the scale of companies

Abstract

Employing profits data of Japanese companies in 2002 and 2003, we confirm that Pareto's law and the Pareto index are derived from the law of detailed balance and Gibrat's law. The last two laws are observed beyond the region where Pareto's law holds. By classifying companies into job categories, we find that companies in a small scale job category have more possibilities of growing than those in a large scale job category. This kinematically explains that the Pareto index for the companies in the small scale job class is larger than that for the companies in the large scale job class.

14 pages, 11 figures

References in corpus (9)

• Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States
• Universal features in the growth dynamics of complex organizations
• Power Law Scaling for a System of Interacting Units with Complex Internal Structure
• Do Pareto-Zipf and Gibrat laws hold true? An analysis with European Firms
• Growth and Fluctuations of Personal Income
• Scaling behavior in economics: II. Modeling of company growth
• Pareto law and Pareto index in the income distribution of Japanese companies
• Fractal Structure with a Typical Scale
• Relations between a typical scale and averages in the breaking of fractal distribution

Cited by in corpus (7)

• Group dynamics of the Japanese market
• Derivation of the distribution from extended Gibrat's law
• Income distribution patterns from a complete social security database
• The uniqueness of company size distribution function from tent-shaped growth rate distribution
• Fat-tailed fluctuations in the size of organizations: the role of social influence
• Shape of Growth Rate Distribution Determines the Type of Non-Gibrat's Property
• Bimodality in the firm size distributions: a kinetic exchange model approach