Working Paper: CEPR ID: DP601
Authors: Giuseppe Bertola
Abstract: The effect of labour turnover costs on average employment in a partial equilibrium model of labour demand, depends on the form of the revenue function, on the rates of discount and labour attrition, and on the relative size of hiring and firing costs. If discount and attrition rates are strictly positive, firing costs may well increase average employment even when hiring costs reduce it.
Keywords: turnover costs; job security; labour contracts
JEL Codes: J23; J63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher firing costs (L97) | increased average employment (J68) |
| higher firing costs (L97) | increased average employment despite hiring costs (J23) |
| firing costs (J32) | increase average labor demand (J23) |
| job security provisions (J65) | ambiguous effects on average labor demand (J29) |
| turnover costs (J63) | significant influence on employment fluctuations (E32) |