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Firing decision in economic downturns and upturns

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Reference no: EM132126095

Suppose that the government is coming up with an employment protection policy that requires firms to pay each laid-off worker two more months of salary after they are laid off. This essentially changes the variable adjustment cost the firm faces when wanting to alter their labor demand. Explain now this policy can change the firm's hiring and firing decision in economic downturns and upturns.

Reference no: EM132126095

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