Firm dynamics, job turnover, and wage distributions in an open economy

A. Kerem Coşar, Nezih Guner and James Tybout

No 2011-06, Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales

Abstract: This paper explores the effects of tariffs, trade costs, and firing costs on firm dynamics and labor markets outcomes. The analysis is based on a general equilibrium model with labor market search frictions, wage bargaining, firing costs, firm-specific productivity shocks, and endogenous entry/exit decisions. Firing costs reduce firms' profits and discourage them from quickly adjusting their employment levels in response to idiosyncratic shocks. Tariffs and other trade costs reduce rents for efficient firms and increase rents for inefficient firms, as in Melitz (2003). These well-known effects interact with idiosyncratic productivity shocks and with scale economies in hiring costs to determine the equilibrium size distribution of firms, entry/exit rates, job turnover rates, rate of informality, and cross-firm wage distributions.

Date: 2011-04-12
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-opm
Note: This paper is included in the IMDEA Social Sciences Working Paper Series through the Bank of Spain Excellence Programme
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Citations: View citations in EconPapers (31)

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Related works:
Journal Article: Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (2016)
Working Paper: Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (2015)
Working Paper: Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (2013)
Working Paper: Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (2013)
Working Paper: Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (2010)
Working Paper: Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (2009)
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