Post-pandemic recovery: Search and matching, market power, and endogenous labor demand

IF 4.2 2区经济学 Q1 ECONOMICS

Economic Modelling Pub Date : 2025-07-02 DOI:10.1016/j.econmod.2025.107183

Konstantin Platonov

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Abstract

Following the COVID-19 pandemic, United States (US) output rebounded quickly, labor productivity rose above pre-pandemic levels, profit rates increased, and the labor market tightened, all despite high unemployment. These observations can be reconciled in a search and matching model of the labor market with two new assumptions of strong firm market power and endogenous labor demand. Market power encourages firm entry when prices rise, while endogenous labor demand enables firms to adapt to shocks rather than shut down. Two regimes arise: one with weak market power, representing the pre-pandemic era and another with strong market power, explaining the post-pandemic recovery. Under strong market power, firm entry drives recovery following recessions, the labor market becomes tight, wages and producer prices rise, and the average firm size shrinks, which is consistent with the post-pandemic data. This study demonstrates how a typical business cycle can be reconciled with US post-pandemic recovery within a unified model, highlighting the non-trivial role of firms’ market power in shaping macroeconomic outcomes.

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大流行后的复苏：搜索与匹配、市场力量和内生劳动力需求

在2019冠状病毒病大流行之后，美国的产出迅速反弹，劳动生产率高于大流行前的水平，利润率上升，劳动力市场收紧，尽管失业率居高不下。这些观察结果可以在劳动力市场的搜索和匹配模型中得到调和，该模型具有两个新的假设，即强企业市场力量和内生劳动力需求。当价格上涨时，市场力量鼓励企业进入，而内生劳动力需求使企业能够适应冲击而不是倒闭。出现了两种机制：一种市场力量弱，代表大流行前的时代；另一种市场力量强，解释大流行后的复苏。在强大的市场力量下，企业进入推动衰退后的复苏，劳动力市场变得紧张，工资和生产者价格上涨，平均企业规模缩小，这与大流行后的数据一致。本研究展示了如何在一个统一的模型中协调典型的商业周期与美国大流行后的复苏，突出了企业的市场力量在塑造宏观经济结果方面的重要作用。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Economic Modelling ECONOMICS-

CiteScore

8.00

自引率

10.60%

发文量

295

期刊介绍： Economic Modelling fills a major gap in the economics literature, providing a single source of both theoretical and applied papers on economic modelling. The journal prime objective is to provide an international review of the state-of-the-art in economic modelling. Economic Modelling publishes the complete versions of many large-scale models of industrially advanced economies which have been developed for policy analysis. Examples are the Bank of England Model and the US Federal Reserve Board Model which had hitherto been unpublished. As individual models are revised and updated, the journal publishes subsequent papers dealing with these revisions, so keeping its readers as up to date as possible.