Review of Economic Studies Vol. 87 No. 3 2020
Labour Market Frictions, Firm Growth, and International Trade
open access
Abstract
I study the aggregate effects of labour market frictions in a small open economy where firms grow slowly and make fixed export investments. The model features interactions between dynamic investments in exporting and search frictions with job-to-job mobility. A calibration to Argentina’s economy matching data on firm growth, worker transitions between firms, and export dynamics suggests that the real income gains from lowering frictions in job-to-job transitions are about seven times larger than comparable reductions in frictions from unemployment. Barriers to worker mobility across firms matter for the real income gains of trade-cost reductions.
- DOI
- 10.1093/restud/rdz063
- Volume
- 87
- Issue
- 3
- Pages
- 1213-1260
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref