Employment Flows, Capital Mobility, and Policy Analysis

Marcelo Veracierto

International Economic Review, 2001, vol. 42, issue 3, 571-95

Abstract: This article extends Hopenhayn and Rogerson's analysis of firing taxes by introducing a flexible form of capital and considering transitionary dynamics. The article finds that capital is not important for understanding the long run and welfare effects of firing taxes. However, capital is crucial for determining the short run consequences of eliminating this type of policy.

Date: 2001
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