Consider a principal who appoints an agent. Let the agent potentially serve for a sufficiently long time that one principal is replaced by another over this period. Suppose also that the quality of the agent appointed increases with the effort the incumbent principal devotes to hiring. Then the...

We consider a firm that is subject to employment protection laws that limit the firm's ability to fire labor. In particular, we suppose that though a firm which shuts down can fire all its workers, it may fire no fewer. Compared to a firm that is subject to no employment protection, a firm...