A Model of Labour Demand with Linear Adjustment Costs

Samuel Bentolila and Gilles Saint-Paul

No 690, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: 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.

Keywords: Firing Costs; Labour Demand; Unemployment (search for similar items in EconPapers)
JEL-codes: J23 (search for similar items in EconPapers)
Date: 1992-08
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: A model of labour demand with linear adjustment costs (1995)
Journal Article: A model of labor demand with linear adjustment costs (1994)
Working Paper: A Model of Labour Demand with Linear Adjustment Costs (1992)
Working Paper: A Model of Labour Demand with Linear Adjustment Costs (1992)
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