Company Start-Up Costs and Employment

@inproceedings{Pissarides2001CompanySC,
  title={Company Start-Up Costs and Employment},
  author={Christopher A. Pissarides},
  year={2001}
}
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. Managers 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… CONTINUE READING
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