How important is imperfect competition in the product market for employment dynamics? To investigate this, we formulate a model of employment adjustment with search frictions, vacancy costs, hiring costs, and imperfect competition in the product market. From this model, we derive a structural...

The authors formulate a stochastic infinite-horizon insider-outsider model that is solved explicitly and used to investigate the consequences of alternative 'seniority' rules for wage and employment determination. The model is simple enough to allow analysis of several different institutional...