Gibrat's Law and the Growth of Cities in Brazil: A Panel Data Investigation

The paper builds on the results of Clark and Stabler who associated Gibrat's law on the independence of growth rate and city size with unit root tests. The paper proposes a direct test of the unit root hypothesis for firm size based on recently developed panel data unit root tests. The results for a sample of Brazilian cities over the period 1980-2000 favour Gibrat's law. Moreover, the results are robust when one considers sub-samples defined for different population sizes and age of municipality.

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