Hiring And Firing: A Tale Of Two Thresholds
AbstractThe negative effect of quits on the willingness of firms to provide on-the-job training is well documented in the theoretical literature. Here we explore the strength of this effect by solving a firm's dynamic optimization problem where there is uncertainty about future productivity and nonzero firing costs. We find that the degree to which quit rates affect hiring depends on the ratio of firing to hiring costs. As this ratio rises, the negative effect of quits becomes less important, eventually reversing itself. We also describe how quit rates affect the firing decision. We highlight some testable implications of our analysis.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Economic Studies, University of Dundee in its series Dundee Discussion Papers in Economics with number 095.
Date of creation: Mar 1999
Date of revision:
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kuhn, Peter, 1992. "Mandatory Notice," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 117-37, April.
- Booth, Alison & Chatterji, Monojit, 1989. "Redundancy Payments and Firm-Specific Training," Economica, London School of Economics and Political Science, vol. 56(224), pages 505-21, November.
- Royalty, Anne Beeson, 1998. "Job-to-Job and Job-to-Nonemployment Turnover by Gender and Education Level," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 392-443, April.
- Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
- Addison, John T & Chilton, John B, 1997. "Nondisclosure as a Contract Remedy: Explaining the Advance-Notice Puzzle," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 143-64, January.
- Yu-Fu Chen & Michael Funke, 2002.
"Exchange Rate Uncertainty and Labour Market Adjustment under Fixed and Flexible Exchange Rates,"
Quantitative Macroeconomics Working Papers
20202, Hamburg University, Department of Economics.
- Chen, Yu-Fu & Funke, Michael, 2002. "Exchange rate uncertainty and labour market adjustment under fixed and flexible exchange rates," HWWA Discussion Papers 196, Hamburg Institute of International Economics (HWWA).
- Yu-Fu Chen & Michael Funke, 2002. "Exchange Rate Uncertainty and Labour Market Adjustment under Fixed and Flexible Exchange Rates," CESifo Working Paper Series 779, CESifo Group Munich.
- Michael Funke & Yu-Fu Chen, 2004. "Exchange rate uncertainty and labour market adjustment under fixed and flexible exchange rates," Money Macro and Finance (MMF) Research Group Conference 2003 33, Money Macro and Finance Research Group.
- Jim Malley & Hassan Molana, 2007.
"The Relationship between Output and Unemployment with Efficiency Wages,"
German Economic Review,
Verein für Socialpolitik, vol. 8, pages 561-577, November.
- Jim Malley & Hassan Molana, 2006. " The Relationship between Output and Unemployment with Efficiency Wages," CDMA Conference Paper Series 0607, Centre for Dynamic Macroeconomic Analysis.
- Elisabetta Magnani, 2012. "Older Workers' Training Opportunities in Times of Workplace Innovation," Working Papers 201205, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
- Yu-Fu Chen & Michael Funke, 2002.
"Working Time and Employment under Uncertainty,"
Dundee Discussion Papers in Economics
134, Economic Studies, University of Dundee.
- Yu-Fu Chen & Michael Funke, 2004. "Working Time and Employment under Uncertainty," Quantitative Macroeconomics Working Papers 20409, Hamburg University, Department of Economics.
- Yu-Fu Chen & Michael Funke, 2002. "Working Time and Employment under Uncertainty," CESifo Working Paper Series 732, CESifo Group Munich.
- World Bank, 2005. "Malaysia : Firm Competitiveness, Investment Climate and Growth," World Bank Other Operational Studies 8310, The World Bank.
- Yu-Fu Chen & I-Hui Cheng, 2003. "Lobbying for Protection under Uncertainty: A Real Option Approach," Dundee Discussion Papers in Economics 155, Economic Studies, University of Dundee.
- Yu-Fu Chen & Michael Funke, 2003. "Exchange Rate Uncertainty and Labour Market Flexibility under Fixed and Flexible Exchange Rates," Dundee Discussion Papers in Economics 149, Economic Studies, University of Dundee.
- B. Dormont & M. Pauchet, 2003. "Uncertainty and Recourse to Short-Term Contracts," THEMA Working Papers 2003-35, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Booth, Alison L. & Zoega, Gylfi, 2003. "On the welfare implications of firing costs," European Journal of Political Economy, Elsevier, vol. 19(4), pages 759-775, November.
- Månsson, Jonas, 2006. "A Note on the Shape of the Cost Function for Recruiting Labour," CAFO Working Papers 2006:4, Centre for Labour Market Policy Research (CAFO), School of Business and Economics, Linnaeus University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Andrzej Kwiatkowski).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.