Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
A new dataset for the average employment size of establishments across sectors and countries is constructed from hundreds of sources. Establishments are larger in manufacturing than in services and in each sector larger in richer countries. The cross-country income elasticity of establishment size is remarkably similar across sectors, about 0.3. A two-sector model with endogenous firm entry, firm-level productivity, and measures of the correlation of wedges with productivity across firms in the data can account for the entire range of establishment size differences and almost 50 percent of the difference in non-agricultural GDP per capita between rich and poor countries.