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dc.contributor.authorChen, Yu-Fuen_US
dc.contributor.authorSnower, Dennis J.en_US
dc.contributor.authorGylfi, Zoegaen_US
dc.date.accessioned2009-01-28T14:20:47Z-
dc.date.available2009-01-28T14:20:47Z-
dc.date.issued2002en_US
dc.identifier.urihttp://hdl.handle.net/10419/2850-
dc.description.abstractMacroeconomic shocks and labour-market institutions jointly determine employment growth and economic performance. The effect of shocks depends on the nature of these intitutions and the effect of institutional change depends on the macroeconomic environment. It follows that a given set of institutions may be appropriate at certain times in some countries while not appropriate elsewhere. We derive a dynamic model of labour demand in which the effect of firing costs on labour demand depends on the macroeconomic environment: When the level of macroeconomic activity is expected to drop and/or the trend rate of productivity growth is small, a rise in firing costs affects mainly (and adversely) the hiring decision and not the firing decision. This makes firing costs harmful when they may appear to be most appropriate. The intuition behind these results is quite straightforward: When managers fear that demand may fall in the future they value the right to fire workers. It follows that by making this option more costly, firing costs reduce the value of workers with adverse consequences for hiring and firing.en_US
dc.language.isoengen_US
dc.publisherInstitut zur Zukunft der Arbeit Bonn-
dc.relation.ispartofseriesIZA Discussion paper series 539en_US
dc.subject.jelE32en_US
dc.subject.jelJ23en_US
dc.subject.jelJ24en_US
dc.subject.jelJ54en_US
dc.subject.ddc330-
dc.subject.keywordfiring costsen_US
dc.subject.keywordstochastic demand-
dc.subject.keywordhiring and firing-
dc.subject.keywordreal options-
dc.subject.stwArbeitsmarkttheorieen_US
dc.subject.stwSchocken_US
dc.subject.stwArbeitsmarktflexibilisierungen_US
dc.subject.stwK√ľndigungen_US
dc.subject.stwTheorieen_US
dc.titleLabour-market institutions and macroeconomic shocksen_US
dc.typeWorking Paperen_US
dc.identifier.ppn355808137en_US
dc.identifier.ppn355808137en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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