How to Construct Nationally Representative Firm Level Data from the Orbis Global Database: New Facts and Aggregate Implications

We construct nationally representative firm-level longitudinal data for European countries using financial statements from the Orbis database. We validate our data by comparing its coverage and firm size distribution to official statistics. We showcase two applications to show the importance of firm representativeness in understanding macroeconomic outcomes. First, we show that small-and-medium-sized firms (SMEs) account for a large share of aggregate economic activity. Second, we document that firm representativeness is important for calculating industry concentration trends over time as the share of economic activity accounted by top firms in an industry changes with the firm samples used.