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Endogenous Market Structures and Labor Market Dynamics

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  • Colciago, Andrea
  • Rossi, Lorenza

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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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29311.

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Date of creation: Feb 2011
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Handle: RePEc:pra:mprapa:29311

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

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Citations

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Cited by:
  1. Giuseppe Fiori & Fabio Ghironi & Matteo Cacciatore, 2012. "Market Deregulation and Optimal Monetary Policy in a Monetary Union," 2012 Meeting Papers 678, Society for Economic Dynamics.
  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. 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.
  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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