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Company start-up costs and employment

Pissarides, Christopher (2002) Company start-up costs and employment. CEP discussion paper; CEPDP0520 (520). Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0-75-301920-5

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I study the role of company start-up costs for employment performance. The model is search equilibrium with a new concept for firms. Agents have an innate managerial ability and make a career choice to become either managers or workers. Manage rs set up firms, post jobs and match with workers. I show that in equilibrium career choice and job creation are jointly determined. Higher start-up costs reduce overall employment but increase the size of incumbent firms. I discuss some cross-country OECD evidence which supports the model’s main proposition.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2002 Christopher A. Pissarides
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
Date Deposited: 27 Apr 2007
Last Modified: 26 Apr 2021 11:51

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