Firm Heterogeneity, Labor Markets and International Trade

The new macroeconomics emphasizes distributions and flows rather than static points and intersections. Because market frictions make the search for trading partners time‑consuming and costly, market participants continually transition between economic states, and trades occur at dispersed prices. These frictions generate incentives for ongoing search and for bargaining between potential trading partners.

This volume advances the empirical study of frictional markets by drawing on the unique merged Danish registers that combine firm accounting data, individual employee records, and international trade information. Using these rich data, it estimates key flow rates, dispersions, and relationships among central variables such as productivity, firm size, wages, exports, growth, and unemployment. The findings deepen our understanding of how markets function, support the interpretation of dispersion and flows as equilibrium outcomes, and offer new insights into economic cycles, adjustment dynamics, and policy design.

This volume is dedicated to the memory of Dale T. Mortensen . It acknowledges his pioneering contributions to the analysis of markets with search frictions and to the use of matched employer–employee data.