Firm size size dynamics in an industrial district: the mover-stayer model in action

In the last decade, the District of Prato suffered a deep shrinkage of Exports and Added Value of its textile industry, the core of the economy of the area. In this paper we aim to investigate if such a crisis entailed a firm downsizing -- evaluated as number of employees -- of the same industry and, possibly, of the overall economy of the District. For this purpose we use the Mover Stayer Model (MS), whose advantage is the pos\-si\-bi\-li\-ty to take into account firms heterogeneity, necessarily ignored by classical Discrete Markov Chains Models. Data are represented by two panels from ASIA-ISTAT data. The main results of the analysis are that: 1) the textile industry is affected by a relevant downsizing of the firm size; 2) such a process takes place through an unchanged level of concentration; 3) the mentioned changes does not seem to spread to the overall economy