Zipf's law in income distribution of companies

Abstract

Distribution functions of annual income of companies are analyzed based on two company databases. A clear power law distribution consistent with the Zipf's law can be confirmed for Japanese companies over more than three decades in income scale. Similar distributions can be confirmed in some other countries. It is confirmed that such power laws hold in most of job categories with slightly modified exponents. An annual income of a company is about two orders of magnitude smaller than its total assets, and the growth rate distribution of income is nearly independent of the income size in contrast to the case of growth rate of assets.