The effects of firing costs on employment and hours per employee

Stucki, Yannic; Thomet, Jacqueline (12 July 2018). The effects of firing costs on employment and hours per employee (Discussion Papers 18-20). Bern: Department of Economics

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We explore the role of firing costs on labor market outcomes in a search and matching framework with distinct decisions on the intensive (hours per employee) and extensive (employment) margins of labor supply. We show that allowing for two distinct labor supply margins matters for assessing firing costs. When the intensive margin is kept fixed (as is typically done in empirical work on firing costs), the dampening effect of firing costs on employment fluctuations is strongly understated. Further, in a quantitative exercise, we calibrate firing costs to represent the different employment protection regulations across OECD countries. We find that with firing costs of a similar size as in France, the drop in US employment during the Great Recession would have been a third its size.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Stucki, Yannic and Thomet, Jacqueline Lea

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

03 Sep 2020 08:22

Last Modified:

03 Sep 2020 08:22

JEL Classification:

E32, F44, J22

BORIS DOI:

10.7892/boris.145873

URI:

https://boris.unibe.ch/id/eprint/145873

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