Purpose– The purpose of this paper is to compare two elements of lay-off costs in a dynamic model of the labor market and analyze the differences for business cycle dynamics and welfare. Design/methodology/approach–The paper builds a general equilibrium Real Business Cycle model and...

Purpose – The purpose of this paper is to compare two elements of lay-off costs in a dynamic model of the labor market and analyze the differences for business cycle dynamics and welfare. Design/methodology/approach – The paper builds a general equilibrium Real Business Cycle model and...

Purpose – The purpose of this paper is to introduce productivity-dependent firing costs into an otherwise standard endogenous separations matching model. The authors suggest an alternative to the standard fix cost approach and account for empirical evidence emphasizing that firing costs vary...