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Endogenous market structures and labour market dynamics

  • Colciago , Andrea


    (University of Milano-Bicocca, Department of Economics)

  • Rossi, Lorenza

    (University of Pavia, Department of Economics)

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

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Paper provided by Bank of Finland in its series Research Discussion Papers with number 12/2011.

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Length: 51 pages
Date of creation: 19 May 2011
Date of revision:
Handle: RePEc:hhs:bofrdp:2011_012
Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
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