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Lay-off restraints, employment subsidies, and the demand for labour

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  • Siebert, Horst
  • Long, Ngo Van

Abstract

The paper introduces the concept of a firm's normal employment level as a weighted average of past employment levels and it analyzes the impact of an incentive scheme in which a firm receives a reward (or pays a penalty) when it deviates above (below) its normal employment level. The result is that such an institutional setting may imply a cyclical demand in labour. Thus, institutional arrangements may .be responsible for business cycles.

Suggested Citation

  • Siebert, Horst & Long, Ngo Van, 1984. "Lay-off restraints, employment subsidies, and the demand for labour," Discussion Papers, Series I 190, University of Konstanz, Department of Economics.
    • Handle: RePEc:zbw:kondp1:190
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    References listed on IDEAS

    as
    1. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
    2. Richardson, Martin & Wilkie, Simon, 1995. "Incremental R&D Subsidies," Journal of Regulatory Economics, Springer, vol. 7(2), pages 161-175, March.
    3. Grandmont, Jean-Michel, 1985. "On Endogenous Competitive Business Cycles," Econometrica, Econometric Society, vol. 53(5), pages 995-1045, September.
    4. Harl E. Ryder & Geoffrey M. Heal, 1973. "Optimal Growth with Intertemporally Dependent Preferences," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(1), pages 1-31.
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