Endogenous Market Structures and Labor Market Dynamics

Arbeitspapier

We propose a model characterized by strategic interactions among an endogenous number of producers and search and matching frictions in the labor market. In line with U.S. data: (i) new firms account for a relatively small share of overall employment, but they create a relevant fraction of new jobs; (ii) firms’ entry is procyclical; (iii) price mark ups are countercyclical, while aggregate profits are procyclical. In response to a technology shock the labor share decreases on impact and overshoots its long run level. Also the propagation on labor market variables is stronger than in the standard search model. We argue that the countercyclicality of the price mark up is the key mechanism for our results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Quaderni di Dipartimento ; No. 155

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: Endogenous Market Structures ; Job Creation ; Firms’ Entry ; Search and Matching Frictions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Colciago, Andrea ; Rossi, Lorenza
• Event: Veröffentlichung
• (who): Università degli Studi di Pavia, Dipartimento di Economia Politica e Metodi Quantitativi (EPMQ)
• (where): Pavia
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/95272
• Last update: 10.03.2025, 11:43 AM CET