A Model of Labour Demand with Linear Adjustment Costs
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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|Date of creation:||1992|
|Date of revision:|
|Publication status:||Published in Labour Economics, 1994, 1, pp. 303-326|
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