Accepted author manuscript, 3.12 MB, PDF document
Available under license: CC BY: Creative Commons Attribution 4.0 International License
Final published version
Research output: Contribution to Journal/Magazine › Journal article › peer-review
| Article number | 104939 |
|---|---|
| <mark>Journal publication date</mark> | 28/02/2025 |
| <mark>Journal</mark> | European Economic Review |
| Volume | 172 |
| Publication Status | Published |
| Early online date | 9/01/25 |
| <mark>Original language</mark> | English |
Profit-seeking is a key driver of new business creation, which, in turn, significantly influences unemployment dynamics. This paper uses US data to estimate the joint responses of firm entry, profits, unemployment, hours worked, and other aggregates to commonly studied supply shocks. Our analysis finds a positive correlation between firm entry, profits, and total hours worked, alongside a negative correlation with the unemployment rate. We develop and estimate a general equilibrium model that captures these dynamics.