The employment and output of Nations: Theory and policy implications

I build a dynamic general equilibrium model that is consistent with the trends in participation, unemployment and employment rates for US major European economies over last 50 years. then use to study interdependence of non-competitive labor product markets order shed light on effects institutions policies output. Unemployment harms output because it inserts wedge between supply (participation) employment. The distribution income across wages profits plays central role economy's dynamics. reason wage share drives market participation decisions households, while profit entry firms. Intuitively, one can think as another margin. uncover feedback mechanisms linking two amplify adverse frictions. These have interesting policy implications.