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A model of labour demand with linear adjustment costs

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  • Bentolila, S.
  • Saint-Paul, G.

Abstract

This paper formulates a discrete-time model to study the effects of firing costs on labour demand by a firm facing linear adjustment costs under serially independent productivity shocks. We show that a rise in firing costs reduces the firm's marginal propensities to hire and fire, and may increase or decrease its average steady-state labour demand.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 2 (1995)
Issue (Month): 1 (March)
Pages: 105-105

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Handle: RePEc:eee:labeco:v:2:y:1995:i:1:p:105c-105c

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Web page: http://www.elsevier.com/locate/labeco

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