Sunk firing costs shelter employment and this effect is typically amplified by uncertainty due to an option value of … waiting. Thus, if sunk firing costs are high, e.g. due to a employment protection legislation, and if recession related losses … be sufficient to avoid layoffs by firms operating with current losses. Depending on the size of sunk hiring costs …

A simple model evaluating a firm’s optimal employment reaction to an imminent recession is presented. Firing costs …. -- Firing costs and uncertainty ; probability ; duration and size of recession …

constraints bind, with risky wages for workers and a risk premium that employers must pay. Mandatory firing costs can help, by … making it easier for employers to promise credibly not to cut wages in low-profitability periods. We show that firing costs …

I exploit the adoption of state-level labor protection laws as an exogenous increase in employee firing costs to … examine how the costs associated with discharging workers affect capital structure decisions. I find that firms reduce debt … costs. I also document that, following the adoption of these laws, a firm's degree of operating leverage rises, earnings …

with significantly lower displacement costs and on average significantly higher pre-closure earnings levels as opposed to … estimated displacement costs to differ between early leavers and ultimately displaced workers. Focusing exclusively on the … latter group would lead to a serious overestimation of displacement costs …