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Employment-At-Will Exceptions and jobless recovery

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  • DeNicco, James P.

Abstract

This paper studies the effects on jobless recovery of diminishing the power of an employer to fire an employee through Employment-At-Will Exceptions (EWEs). I use dynamic panel regressions with quarterly data ranging from 1976 to 2010 for the 50 states in the U.S. I test both changes in state unemployment rates and state-weighted GDP growth. I also resolve differences in the various sources documenting the three types of EWEs in different states and show two of the three contribute significantly to jobless recovery in the U.S. The results lend support to predictions of theory that increased firing costs decrease the rate of hiring during recoveries. Statistical tests show the adoption of both EWEs would slow decreases in the unemployment rate during recovery from recession by up to 0.352 percentage points annually.

Suggested Citation

  • DeNicco, James P., 2015. "Employment-At-Will Exceptions and jobless recovery," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 245-257.
    • Handle: RePEc:eee:jmacro:v:45:y:2015:i:c:p:245-257
    DOI: 10.1016/j.jmacro.2015.05.003
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    References listed on IDEAS

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    Cited by:

    1. Panovska, Irina & Ramamurthy, Srikanth, 2022. "Decomposing the output gap with inflation learning," Journal of Economic Dynamics and Control, Elsevier, vol. 136(C).
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    4. Matthew S. Johnson & Daniel Schwab & Patrick Koval, 2022. "Legal Protection Against Retaliatory Firing Improves Workplace Safety," Working Papers 2203, College of the Holy Cross, Department of Economics.
    5. Elroukh, Ahmed W. & Nikolsko-Rzhevskyy, Alex & Panovska, Irina, 2020. "A look at jobless recoveries in G7 countries," Journal of Macroeconomics, Elsevier, vol. 64(C).

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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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