Labour Market Frictions, Firm Growth, and International Trade

Pablo D. Fajgelbaum

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


I study the aggregate effects of labour 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 real income gains from lowering frictions in job-To-job transitions are about seven times larger than comparable reductions in frictions from unemployment. Barriers to worker mobility across firms matter for the real income gains of trade-cost reductions.

Original languageEnglish (US)
Pages (from-to)1213-1260
Number of pages48
JournalReview of Economic Studies
Issue number3
StatePublished - May 1 2020

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


  • Firm growth
  • International trade
  • Job-To-job transitions
  • Labour market frictions


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