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Title:Capacity constraining labor market frictions in a global economy PDF Logo
Authors:Holzner, Christian
Larch, Mario
Issue Date:2011
Series/Report no.:CESifo working paper: Trade Policy 3597
Abstract:Convex vacancy creation costs shape firms' responses to trade liberalization. They induce capacity constraints by increasing firms' cost of production, leading a profit maximizing firm not to fully meet the increased foreign demand. Hence, firms will only serve a few export markets. More productive firms will export to more countries and charge higher or similar prices compared to less productive firms. Trade liberalization also affects labor market outcomes. Increased profits by exporting firms triggers firm entry, reduces unemployment and increases wage dispersion in the on-the-job search model with monopolistic competition.
Subjects:on-the-job search
capacity constraints
international trade
heterogeneous firms
monopolistic competition
JEL:F16
F12
J64
L11
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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