implications for the unemployment-inflation tradeoff and for the conduct of monetary policy.We proceed in two steps. We first leave … firms. We derive the relation between inflation and unemployment and discuss how it is influenced by the presence of labor … market frictions and real wage rigidities. We show the nature of the tradeoff between inflation and unemployment …

labor market frictions. We characterize the distributions of employment, unemployment, wages and income within and between … sectors as a function of structural parameters. We find that greater firm heterogeneity increases unemployment, wage … frictions have non-monotonic effects on aggregate unemployment and inequality through within- and between-sector components …