-run unemployment rate) and the lag structure of the employment determination, wage setting, and labour force participation decisions …

Do firms reduce employment when their insiders (established, incumbent employees) claim higher wages? The conventional … answer in the theoretical literature is that insider power has no influence on employment, provided that the newly hired … firing in recessions, while leaving hiring in booms unchanged. Thereby insider power reduces average employment. …

In this paper we analyse the employment implications of firing restrictions. We find that when a recession is expected … is a negative effect on average employment. When, on the other hand, a boom is expected and the rate of productivity … growth is large, firing costs affect mainly the firing decision. Then, as a result, average employment is increased. Our …