Title: “Empirical Structure of U.S. Business Firms”
Nearly 4 dozen empirical patterns and gross regularities have been discovered in recent years in firm-level micro-data (derived from tax filings, primarily) for the 5-6 million American businesses that employ workers each year. These include power law distributions of firm sizes, labor productivities, importer and exporter sizes, Weibull distributions of firm ages and lifetimes, heavy-tailed distributions of exit rates, and power law sizes of entrants and exiting firms. Growth rates are also heavy-tailed as are a variety of firm financial and network variables. Further, the clustering of firms in spatial agglomerations (cities) is also characterized by a variety of heavy tails. I will argue that conventional economic theories, grounded as they are in representative agents who are rational, and are solved for agent-level equilibria, will never be able to explain data characterized by such extremes. I will discuss the implications of such data for building more realistic economic models, and having such models serve as bases of new data-driven approaches to economic theories.
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Rob Axtell is a professor for Computational Social Science at the George Mason University. He works at the intersection of the computational, social, behavioral, and economic sciences. His research group combines agent-based computing with micro-data to build large-scale models having high verisimilitude with the real-world. They have worked on a variety of policy issues, from housing to fisheries, behavioral aspects of retirement and science policy. His research has been published in leading general interest journals (“Science,” “Nature” and “Proceedings of the National Academy of Sciences”), in field journals (e.g., “American Economic Review,” “Economic Journal”, “Computational and Mathematical Organization Theory,” “Journal of Industrial Ecology”), and reprised in newspapers (e.g., “Wall St. Journal,” “Washington Post”) and technology publications (e.g., “Scientific American,” “Technology Review,” “Wired”).
The talk will take place on March 15, 2023 at 3 PM in the Salon.