Hiring,firing, and relocation under employment protection |
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| Institution: | 1. Department of Mathematics and Risk Management Institute, University of Singapore, Singapore;2. NUS Business School, National University of Singapore, Singapore;3. IOE Department, University of Michigan, United States;1. Research Division, Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, MO 63166-0442, USA;2. Department of Economics, Robins School of Business, University of Richmond, Richmond, VA 23173, USA;1. Faculty of Agriculture and Environment, The University of Sydney, 1 Central Avenue, Australia Technology Park, Eveleigh, NSW 2015, Australia;2. EcoSciences Precinct, Department of Science, Information Technology and Innovation, GPO Box 5078, Brisbane, QLD 4001, Australia;3. INRA — Infosol, US1106, 2163 Avenue de la Pomme de Pin, Ardon CS 40001, Orléans, France;1. CEA, DEN, DER, Laboratoire de Dosimétrie, Capteurs et Instrumentation (LDCI), Cadarache, 13108 Saint Paul-lez-Durance, France;2. CEA, LIST, Laboratoire National Henri Becquerel (LNE-LNHB), CEA-Saclay, Bât 602, C 111, 91191 Gif-sur-Yvette CEDEX, France;3. CEA, DEN, DEC, Laboratoire d′Analyses Radiochimiques et Chimiques, Cadarache 13108 Saint Paul-lez-Durance, France |
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| Abstract: | We analyze how hiring and firing costs as well as firing regulatory delays affect firms’ hiring, firing, and relocation policy with a stochastic control model. These frictions are substantial; e.g. the firing delay can be almost a year. In the model hiring and firing costs depend on the firm size and the number of people hired or fired. Based on our simulations, hiring and firing elasticities without relocation are highest with respect to demand and productivity volatility and the hiring and firing variable costs. The elasticity of firing due to relocation is highest with respect to the firm-sized firing cost. |
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| Keywords: | Labor market frictions Job reallocation Stochastic control |
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