Hiring, firing, and relocation under employment protection

Min Dai, Jussi Keppo, Tim Maull

Research output: Journal article publicationJournal articleAcademic researchpeer-review

2 Citations (Scopus)


We analyze how hiring and firing costs as well as firing regulatory delays affect firms' hiring, firing, and relocation policy with a stochastic control model. These frictions are substantial; e.g. the firing delay can be almost a year. In the model hiring and firing costs depend on the firm size and the number of people hired or fired. Based on our simulations, hiring and firing elasticities without relocation are highest with respect to demand and productivity volatility and the hiring and firing variable costs. The elasticity of firing due to relocation is highest with respect to the firm-sized firing cost.

Original languageEnglish
Pages (from-to)55-81
Number of pages27
JournalJournal of Economic Dynamics and Control
Publication statusPublished - 1 Jul 2015
Externally publishedYes


  • Job reallocation
  • Labor market frictions
  • Stochastic control

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


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