Work in econophysics has shown the existence of robust structures in economics data, which had been largely ignored in past economic literature. Many complex interacting systems in nature , such as earthquakes , are described by power laws. In statistical physics, fluctuations for systems near the critical point follow a power law distribution. The exponents associated with the power law for fluctuations can be used to categorize the systems into specific universality classes. In economics, growth rates for firms depend on different factors for different industries .  Here, we show that fluctuations in growth for companies follow a power law with very similar scaling exponents, irrespective of the economic sector. Our findings hold for many industries across all available data . Furthermore, we show that fluctuations of the growth rate for new industries URLanize into a power law distribution over relatively short time scales . Our results provide the first strong evidence of statistical mechanical universality in economic systems, and can be used as an empirical test for theories of microeconomic growth .
The growth of business firms is an example of a system of complex interacting units that resembles complex interacting systems in nature such as earthquakes . Remarkably, work in econophysics has provided evidence that the statistical properties of the growth of business firms follow the same sorts of power laws that characterize physical systems near their critical points. Given how economies change over time, whether these statistical properties are persistent, robust, and universal like those of physical systems remains an open question. Here, we show that the scaling properties of firm growth previously demonstrated for publicly-traded U.S. manufacturing firms from 1974 to 1993 apply to the same sorts of firms from 1993 to 2015, to firms in other broad sectors (such as materials), and to firms in new sectors (such as Internet services). We measure virtually the same scaling exponent for manufacturing for the 1993 to 2015 period as for the 1974 to 1993 period and virtually the same scaling exponent for other sectors as for manufacturing . Furthermore, we show that fluctuations of the growth rate for new industries URLanize into a power law over relatively short time scales .
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Work in econophysics has shown the existence of robust structures in economics data, which had been largely ignored in past economic literature. Many complex interacting
The growth of business firms is an example of a system of complex interacting units that resembles complex interacting
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,
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, are described by power laws. In statistical physics, fluctuations for systems near the critical point follow a power law distribution. The exponents associated with the power law for fluctuations can be used to categorize the systems into specific universality classes. In economics, growth rates for firms depend on different factors for different industries
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Remarkably, work in econophysics has provided evidence that the statistical properties of the growth of business firms follow the same sorts of power laws that characterize physical systems near their critical points. Given how economies change over time, whether these statistical properties are persistent, robust, and universal like those of physical systems remains an open question.
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fluctuations in growth for companies follow a power law with very similar scaling exponents, irrespective of the economic sector. Our findings hold for many industries across all available data
the scaling properties of firm growth previously demonstrated for publicly-traded U.S. manufacturing firms from 1974 to 1993 apply to the same sorts of firms from 1993 to 2015, to firms in other broad sectors (such as materials), and to firms in new sectors (such as Internet services). We measure virtually the same scaling exponent for manufacturing for the 1993 to 2015 period as for the 1974 to 1993 period and virtually the same scaling exponent for other sectors as for manufacturing
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distribution
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. Our results provide the first strong evidence of statistical mechanical universality in economic systems, and can be used as an empirical test for theories of microeconomic growth