NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Labor Market Frictions, Firm Growth, and International Trade

Pablo D. Fajgelbaum

NBER Working Paper No. 19492
Issued in October 2013, Revised in November 2016
NBER Program(s):ITI

This paper develops a model to study the aggregate effects of labor 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 gains from lowering frictions in job-to-job transitions are considerable, and may outweigh those from lowering frictions in hiring from unemployment.

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Document Object Identifier (DOI): 10.3386/w19492

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