This paper proposes a model of labour demand based on a bankruptcy constrained firm. This implies two different regimes for the process generating labour demand: one when this bankruptcy constraint is not binding and one when it is. The same applies to unemployment. This unemployment model is...

This study presents an empirical analysis of the influence of labour market flows on wage and price formation. A system of wage, price and employment equations after Nickell (Oxford Bulletin of Economics and Statistics 49: 103-128, 1987) is estimated, including labour flows as indicators of...