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Endogenous Market Structures and Labor Market Dynamics

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  • Andrea Colciago

    (Department of Economics, University of Milano Bicocca)

  • Lorenza Rossi

    ()
    (Department of Economics and Quantitative Methods, University of Pavia)

Abstract

We propose a flexible prices model where endogenous market structures and search and matching frictions in the labor market interact endogenously. The interplay between firms endogenous entry, strategic interactions among producers and labor market frictions represents a strong amplification channel of technology shocks on labor market variables, and helps addressing the unemployment-volatility puzzle. Consistently with U.S. evidence, new firms create a large fraction of new jobs and grow faster than more mature firms, net firms’ entry is procyclical and the price mark up is countercyclical.

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File URL: http://economia.unipv.it/docs/dipeco/quad/ps/RePEc/pav/wpaper/q139.pdf
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Bibliographic Info

Paper provided by University of Pavia, Department of Economics and Quantitative Methods in its series Quaderni di Dipartimento with number 139.

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Length: 42 pages
Date of creation: Feb 2011
Date of revision: Feb 2011
Handle: RePEc:pav:wpaper:139

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Keywords: Endogenous Market Structures; Firms’ Entry; Search and Matching Frictions;

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References

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Citations

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Cited by:
  1. Andrea Colciago & Lorenza Rossi, 2013. "Firm Entry, Endogenous Markups and the Dynamics of the Labor Share of Income," DNB Working Papers 367, Netherlands Central Bank, Research Department.
  2. Paloviita, Maritta & Kinnunen, Helvi, 2011. "Real time analysis of euro area fiscal policies: adjustment to the crisis," Research Discussion Papers 21/2011, Bank of Finland.
  3. Matteo Cacciatore & Giuseppe Fiori & Fabio Ghironi, 2013. "Market Deregulation and Optimal Monetary Policy in a Monetary Union," NBER Working Papers 19025, National Bureau of Economic Research, Inc.
  4. Crowley , Patrick M & Hughes Hallett, Andrew, 2011. "The great moderation under the microscope: decomposition of macroeconomic cycles in US and UK aggregate demand," Research Discussion Papers 13/2011, Bank of Finland.

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