Company Start-Up Costs and Employment
AbstractI study the role of company start-up costs for employment performance. The model is search equilibrium with a new concept for firms. Agents have an innate managerial ability and make a career choice to become either managers or workers. Managers set up firms, post jobs and match with workers. Managers set up firms, post jobs and match with workers. I show that in equilibrium, career choice and job creation are jointly determined. Higher start-up costs reduce overall employment but increase the size of incumbent firms. I discuss some cross-country OECD evidence which supports the model's main proposition.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0520.
Date of creation: Mar 2002
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Start-up costs; regulation; employment; OECD unemployment; search and matching.;
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