Garibaldi, Pietro; Violante, Giovanni L. - In: Economic Journal 115 (2005) 506, pp. 799-832
Firing costs have two separate dimensions: a transfer from the firm to the laid-off worker and a tax paid outside the firm-worker pair. To avoid the 'bonding critique' most of the existing literature implicitly assumes that, in the presence of wage rigidity, transfers have the same real effects...