Mover-Stayer Model in an Industrial Area: a first application

In the last decade the District of Prato has suffered a deep shrinkage of exports and Added Value of its textile industry which is the core of the overall economy of the same small area.In this paper we want to investigate if the same shrinkage has involved a firm size downsizing-measured in number of employees- both of the textile industry and the overall economy of the District. For this purpose we use the Mover Stayer Model (MS), which advantage is the possibility to consider firms heterogeneity, necessarily ignored in classical Discrete Markov Chains. The used estimators are Goodman (1961) and Frydman (1984). Of this second estimator we point out the necessity to restrain its validity both on applied and a priori mathematical ground. Data are represented by two fix panels formed from ASIA-ISTAT. Firm size equilibrium distributions are simulated.