This paper uses a general equilibrium search model to study the effects of firing costs in the presence of imperfect … information about workers? ability. Firing costs change the way firms form expectations about workers? abilities from their … employment history. The model exhibits the standard implication that firing costs lower the option value of hiring workers of …

In many countries, labor courts play a central role in the determination of firing costs by monitoring and supervising … legislation (EPL). To get some insights about the impact of labor courts on effective firing costs, we explore a new database that … did not fully translate the reduction of firing costs mandated by the new EPL to effective firing costs. …