How Large Are Firing Costs? A Cross-Country Study

In: Applied Economics Quarterly, Band 66, Heft 4, S. 319-328

Abstract

This paper provides evidence for the size and the cyclicality of firing costs for the United States and Germany. In contrast to the existing literature, we use the optimality conditions obtained in a search and matching model to find a reduced form equation for firing costs. We find that our estimates are slightly larger compared with other studies and document sizable time-variation in firing costs.