Arbeitspapier
Firing versus continuing employment if an economic setback is expected
A simple model evaluating a firm’s optimal employment reaction to an imminent recession is presented. Firing costs shelter employment – and this effect is typically amplified by uncertainty due to an option value of waiting. However, this job protection effect is reduced if the expected probability of a setback increases, and if the expected duration and size of a recession grows. If a severe recession is expected with a high probability the option to wait with firing looses its value, thus, immediate layoffs and market exits become the optimal strategy even before the recession turns out to be actual.
- Language
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Englisch
- Bibliographic citation
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Series: MAGKS Joint Discussion Paper Series in Economics ; No. 2009,18
- Classification
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Wirtschaft
Criteria for Decision-Making under Risk and Uncertainty
Labor Turnover; Vacancies; Layoffs
- Subject
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Firing costs and uncertainty
probability
duration and size of recession
- Event
-
Geistige Schöpfung
- (who)
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Göcke, Matthias
- Event
-
Veröffentlichung
- (who)
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Philipps-University Marburg, Faculty of Business Administration and Economics
- (where)
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Marburg
- (when)
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2009
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Göcke, Matthias
- Philipps-University Marburg, Faculty of Business Administration and Economics
Time of origin
- 2009
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Von „continuing medical education“ zu „continuing professional development“
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