Labor Turnover Costs and Average Labor Demand

Giuseppe Bertola

No 3866, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies simple partial equilibrium models of dynamic labor demand, under certainty. Labor turnover costs may or may not decrease the firm's average labor demand, depending on the form of the revenue function, on the rates of discount and of labor attrition, and on the relative size of hiring and firing costs. With strictly positive discount and labor attrition rates, the firm's optimal policy is partially myopic, and firing costs may well increase average employment even when hiring costs reduce it.

Date: Written 1991-10
Note: EFG

Published as Journal of Labor Economics Volume 10, No. 4, October 1992, pp. 380-388

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Related works:
Working Paper: Labour Turnover Costs and Average Labour Demand (1991)
Journal Article: Labor Turnover Costs and Average Labor Demand (1992)
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