Firm entry, endogenous wage moderation, and labor market dynamics

Colciago, Andrea and Fasani, Stefano and Rossi, Lorenza (2025) Firm entry, endogenous wage moderation, and labor market dynamics. European Economic Review, 172: 104939. ISSN 0014-2921

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Abstract

Profit-seeking is a key driver of new business creation, which, in turn, significantly influences unemployment dynamics. This paper uses US data to estimate the joint responses of firm entry, profits, unemployment, hours worked, and other aggregates to commonly studied supply shocks. Our analysis finds a positive correlation between firm entry, profits, and total hours worked, alongside a negative correlation with the unemployment rate. We develop and estimate a general equilibrium model that captures these dynamics.

Item Type:

Journal Article

Journal or Publication Title:

European Economic Review

Uncontrolled Keywords:

Research Output Funding/no_not_funded

Subjects:

?? bayesian analysisentrysearch and matchingunemploymentno - not fundednoeconomics and econometricsfinance ??

Departments:

Lancaster University Management School > Economics

ID Code:

227735

Deposited By:

ep_importer_pure

Deposited On:

21 Feb 2025 14:40

Refereed?:

Yes

Published?:

Published

Last Modified:

21 Mar 2025 01:52

URI:

https://eprints.lancs.ac.uk/id/eprint/227735