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

我建立了一个动态的一般均衡模型，该模型与过去 50 年美国和欧洲主要经济体的参与率、失业率和就业率的趋势一致。然后，我使用该模型来研究非竞争性劳动力和产品市场的相互依存关系，以阐明制度和政策对就业和产出的影响。失业损害产出，因为它在劳动力供应（参与）和就业之间插入了一个楔子。工资和利润之间的收入分配在经济动态中起着核心作用。原因是工资份额驱动着家庭的劳动力市场参与决策，而利润份额驱动着企业的进入决策。直观地，人们可以将入场决策视为另一种参与保证金。我发现了连接两个市场的反馈机制，这些机制放大了劳动力和产品市场摩擦对产出的不利影响。这些机制具有有趣的政策含义。