Non-Wage Labour Costs, Policy Uncertainty And Labour Demand - A Theoretical Assessment
AbstractLabour costs in various European countries have reached a record high in recent years. The topic of non-wage labour costs is therefore increasingly being discussed among and between the political parties because non-wage labour costs are likely to have major negative effects on employment. We follow the real options approach, which allows us to investigate the value to a firm of waiting to adjust labour when the firm's wage and non-wage costs are stochastic and adjustment costs are sunk. Simulation exercises show that the interaction between hiring and firing costs, non-wage labour costs and uncertainty can have important ramifications for employment dynamics. Copyright (c) Scottish Economic Society 2005.
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Bibliographic InfoArticle provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.
Volume (Year): 52 (2005)
Issue (Month): 5 (November)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0036-9292
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Other versions of this item:
- Yu-Fu Chen & Michael Funke, 2005. "Non-Wage Labour Costs, Policy Uncertainty and Labour Demand - a Theoretical Assessment," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 20511, Hamburg University, Department of Economics.
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