The Interaction of Firing Costs and Firm Training

University of St. Gallen Department of Economics Discussion Paper No. 2006-01

41 Pages Posted: 2 Feb 2006  

Wolfgang Lechthaler

Institute for the World Economy

Date Written: January 2006

Abstract

This paper analyzes the effects of firing costs in a broader setup than what is usually done, allowing for on-the-job training. By doing so the traditional analysis is extended with respect to two points:

On the one hand firing costs clearly increase firm training because worker and firm are less likely to separate.

On the other hand, firm training gives firms the opportunity to lower the costs of firing restrictions: After all the value of output of a well-trained worker is less likely to turn negative. Through these two channels firm training is able to diminish the negative effects of firing restrictions usually discussed in the literature.

Keywords: Firm Training, Firing Costs, Human Capital

JEL Classification: E24, J24, J63, J68, M53

Suggested Citation

Lechthaler, Wolfgang, The Interaction of Firing Costs and Firm Training (January 2006). University of St. Gallen Department of Economics Discussion Paper No. 2006-01. Available at SSRN: https://ssrn.com/abstract=880015 or http://dx.doi.org/10.2139/ssrn.880015

Wolfgang Lechthaler (Contact Author)

Institute for the World Economy ( email )

Düsternbrooker Weg 120
Kiel, D-24105
Germany

HOME PAGE: http://www.ifw-kiel.de/kiel-institute-for-the-world-economy/view?set_language=en

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