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The purpose of this paper is to introduce productivity-dependent firing costs into an otherwise standard endogenous separations matching model. The authors suggest an alternative to the standard fix cost approach and account for empirical evidence emphasizing that firing costs vary across workers. The authors show that the model with firing costs outperformes the model without firing costs and replicates the empirical facts fairly well. Furthermore, the authors present cross-country evidence that countries with stricter employment protection have a weaker Beveridge curve relation and surprisingly more volatile job flow rates.

The authors begin the analysis at the intersection of labor and product markets. For this purpose, the authors derive a real business cycle model with search and matching frictions and endogenous separations. The authors enrich this set-up by introducing productivity-dependent firing costs.

The authors show that the model with firing costs outperformes the model without firing costs and replicates the empirical facts fairly well. Furthermore, the authors present cross-country evidence that countries with stricter employment protection have a weaker Beveridge curve relation and surprisingly more volatile job flow rates.

This paper introduces productivity-dependent firing costs into an otherwise standard endogenous separations matching model. The authors suggest an alternative to the standard fix cost approach and account for empirical evidence emphasizing that firing costs vary across workers. The authors show that the model with firing costs outperformes the model without firing costs and replicates the empirical facts fairly well. Furthermore, the authors present cross-country evidence that countries with stricter employment protection have a weaker Beveridge curve relation and surprisingly more volatile job flow rates.

The purpose of this paper is to compare two elements of lay-off costs in a dynamic model of the labor market and analyze the differences for business cycle dynamics and welfare.

The paper builds a general equilibrium Real Business Cycle model and introduces firing costs and severance payments. Labor market frictions are assumed to follow the famous search and matching approach.

The paper finds that firing costs imply a higher volatility over the cycle and have stronger negative welfare effects. Severance payments have a lower volatility, reduce unemployment, and reduce welfare by a smaller amount.

Policy reforms should be aimed to use severance payments and reduce the ring cost component of lay-off costs.

Increasing welfare and a more stable business cycle could be supported by using severance payments instead of firing costs.

This paper aims to weigh the restrictions to job creation imposed by labor market imperfections with respect to financial market imperfections. The authors want to see which restriction is more severe, and thus assess which is more powerful in creating permanent employment if it were removed.

A structural estimation is performed. The policy rules of the dynamic programming model are integrated into a simulated maximum likelihood procedure by which the model parameters are recovered. Data come from the CBBE (Balance Sheet data from the Bank of Spain). Identification of key parameters comes mainly from the observation of debt variation and sluggish adjustment to permanent labor.

Long-run permanent employment increases up to 69% when financial constraints are removed, whereas permanent employment only increases up to 54% when employment protection or firing costs are eliminated. The main finding of this paper is that the long-run expansion of permanent employment is larger when financial imperfections are removed than when firing costs are removed, even when there are important wage increases that moderate these employment expansions.

The removal of firing costs has been suggested by several economists as a result of the analysis of labor market imperfections. These policies, however, face the strong opposition of labor unions. This paper shows that the goals of permanent job creation can be accomplished without removing employment protection but by means of enhancing financial access to firms.

The connection between financial constraints and employment has been studied in recent years, motivated by the Great Recession. However, there is no assessment of how financial and labor market imperfections compare with each other to restrict permanent job creation. This comparison is crucial for policy analysis. This study is an attempt to fill out this gap in the economic literature. No previous research has attempted to perform this very important comparison.

We investigate how firing notification procedures influence wage growth. Using a sample of 33 countries over the period 2006–2015, we show that administrative requirements in cases of dismissal have a positive and significant effect on wage growth. The result is robust even after controlling for the endogeneity of the firing notification restrictions, the involvement of third parties in the wage bargaining process, the minimum wage, the firms' training policy, and the composition of employment. These findings suggest that firing notification procedures foster the growth of wages by increasing the bargaining power of incumbent workers.

This study provides an empirical analysis of the relationship between job design and the labor-market environment in which firms operate. In particular, I focus on one aspect of job design: the extent to which employees have discretion (autonomy) to organize their work. There has been considerable emphasis in the last 20 years on the importance of “high-involvement” work practices, which seek to give employees more decision rights at work. This literature has been concerned with the introduction of work practices such as team work, job rotation, or quality circles, and with the use of performance pay contracts. Within this literature, there are also some studies that focus more particularly on the extent to which employees have job discretion or autonomy. Discretion is an important characteristic of jobs because much of the redesign effort that has been conducted in the last years has aimed at giving employees more power to make decisions at work, and performance gains are largely attributed to these changes.

A country’s institutional environment influences every facet of its business. This paper aims to identify institutional factors (state ownership, government attention on employment and employees’ educational background) that affect the asymmetric cost behavior in China.

Using 2,570 listed firms’ data between 2002 and 2015, we use empirical models to explore the effects of state ownership, government attention on employment and employees’ educational background on the asymmetric cost behavior in China.

This study found that the asymmetric cost behavior of central state-owned enterprises (CSOEs) is greater than local state-owned enterprises (LSOEs). Meanwhile, the empirical results show that government attention on employment is reflected in five-year government plans, and employees’ educational backgrounds are positively associated with asymmetric cost behavior.

This study contributes to the economic theory of sticky costs, institutional theory and asymmetric cost behavior literature by providing evidence that shows how government intervention and employee educational background limit the flexibility of corporate cost adjustments. Additionally, this study provides guidance to policymakers by showing how government long-term plans affect firm-level resource adjustment decisions.

To evaluate past and recent research on the costs of training human resources in Australia and to compare the merits of different research methods used to measure these costs. The discussion is situated in a general context of low employer contribution to training provision in Australia and acute policy debates on public training provision.

The article presents the aggregate results of two recent quantitative surveys of training costs in Australian organizations. Both surveys adopt an economic definition of the costs and concentrate on firm‐specific skills acquired up until new recruits reach average productivity.

Survey results suggest that the informal costs of training human resources outstrip direct training expenditure and average training costs are much larger than commonly assumed in the policy debate in Australia.

Ideally, the surveys reported upon should be extended to include continuing training costs and a measure of the degree of employer‐provided general training.

Official surveys largely underestimate the cost of employer‐provided training in Australia, contributing to (mistaken?) perceptions of private sector disengagement. Existing measures of the costs should adopt a more comprehensive approach, including the use of economic concepts.

This research stresses, both to HR practitioners and policy makers, the value of measuring opportunity costs in training processes, and contributes to its quantification.

This paper aims to test the hypothesis that the effect of production slowdown on labour demand can be muted by labour hoarding.

This study adopts a production function approach, using data from Malta, a small state in the EU.

The results confirm the hypothesis and indicate that firms are normally prepared to employ and dismiss more workers in the long run than in the short run.

This finding has important implications for developed countries, including that labour hoarding can be of certain relevance in times of economic slowdown as shocks are absorbed by internal flexibility.

The results of this study add on to the existing literature in two ways. First, this study compares two industries –manufacturing and financial services– for which the former sector received support to hoard labour after the financial turmoil of 2008. Consequently, the dominance of labour hoarding in manufacturing relative to financial services is uncovered and the effect of hoarding practices on labour demand is estimated. Second, Malta is an interesting case because it is one of the smallest economies in the world and faces a high degree of vulnerability because of constraints associated with small size and insularity. As a result, firms adopt policy-induced measures to minimise adjustment costs.

In the last two decades the economic literature has devoted significant attention to the mechanisms behind firms′ recruitment strategies as a possible way of reducing (un)employment problems. At the workfloor many efforts have also been made by firms to develop strategies that both alleviate conflicts with employees and at the same time lead to acceptable levels of productivity. This effort has resulted in the broad acceptance of the personnel management function in the firm. Examines how successful this approach has been by focusing on the gap between practice and theory in recruitment, by investigating the extent to which and the way in which experiences and findings from actual recruitment (personnel management) have been incorporated in economic theory. Gives an overview of findings on recruitment and selection strategies of firms, with a particular emphasis on economic motives.