Labor Market Dynamics and Growth

Bradley, Jake; Gottfries, Axel

Abstract

This paper seeks to understand the implications of incorporating economic growth into a search-theoretic model of the labor market. To this end, a technological diffusion process is embedded into the canonical search and matching model of the labor market. New matches imitate the production process of incumbents. Although the canonical model is only modified slightly, there are stark differences in economic intuition across the two models. Market tightness is equilibrated through a different margin, and comparative statics of the two models are qualitatively different. Additionally, the model with endogenous growth — consistent with empirical data — generates stronger unemployment cyclicality than a similarly calibrated model without endogenous growth.

Citation

Bradley, J., & Gottfries, A. (2025). Labor Market Dynamics and Growth. Journal of the European Economic Association, https://doi.org/10.1093/jeea/jvaf027

• Journal Article Type: Article
• Acceptance Date: May 24, 2025
• Online Publication Date: Jul 29, 2025
• Publication Date: Jul 29, 2025
• Deposit Date: Aug 4, 2025
• Publicly Available Date: Aug 4, 2025
• Journal: Journal of the European Economic Association
• Print ISSN: 1542-4766
• Electronic ISSN: 1542-4774
• Publisher: Oxford University Press
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1093/jeea/jvaf027
• Public URL: https://nottingham-repository.worktribe.com/output/52457873
• Publisher URL: https://academic.oup.com/jeea/advance-article/doi/10.1093/jeea/jvaf027/8217239