Labor's Liquidity Service and Firing Costs:
This paper proposes a new effect of firing costs on firms'' behavior that builds from firms'' demand for liquidity. When a time gap exists between production and its associated revenues, firing can become a liquidity adjustment tool that allows firms to increase their short-term...
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Washington, D.C
International Monetary Fund
2007
|
| Schriftenreihe: | IMF Working Papers
Working Paper No. 07/120 |
| Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 URL des Erstveröffentlichers |
| Zusammenfassung: | This paper proposes a new effect of firing costs on firms'' behavior that builds from firms'' demand for liquidity. When a time gap exists between production and its associated revenues, firing can become a liquidity adjustment tool that allows firms to increase their short-term liquidity. I refer to this feature as labor''s liquidity service. The presence of firing costs reduces the value of labor''s liquidity service, which affects firms'' demand for liquidity, and thus, firms'' demand for inputs. In addition to this negative effect at the creation margin, I also show that firing costs imply relatively higher destruction for financially restricted firms. I present a model that develops these ideas and show that the presence of firing costs has a stronger negative effect on production levels of firms facing liquidity constraints. Regression analysis, based on country industry panel data sets, provides empirical evidence in line with the liquidity service effect of firing costs proposed. I reject the hypothesis that the effect of firing costs does not depend on the presence of financial restrictions. I find a relatively stronger negative effect of firing costs on the output of industries with higher liquidity requirements and a relatively stronger negative effect of firing costs on the output of small firms |
| Beschreibung: | 1 Online-Ressource (34 p) |
| ISBN: | 1451866844 9781451866841 |
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| illustrated | Not Illustrated |
| index_date | 2024-07-03T20:13:24Z |
| indexdate | 2024-07-10T09:35:33Z |
| institution | BVB |
| isbn | 1451866844 9781451866841 |
| language | English |
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| record_format | marc |
| series2 | IMF Working Papers |
| spelling | Bennett, Herman Z. Verfasser aut Labor's Liquidity Service and Firing Costs Bennett, Herman Z Washington, D.C International Monetary Fund 2007 1 Online-Ressource (34 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 07/120 This paper proposes a new effect of firing costs on firms'' behavior that builds from firms'' demand for liquidity. When a time gap exists between production and its associated revenues, firing can become a liquidity adjustment tool that allows firms to increase their short-term liquidity. I refer to this feature as labor''s liquidity service. The presence of firing costs reduces the value of labor''s liquidity service, which affects firms'' demand for liquidity, and thus, firms'' demand for inputs. In addition to this negative effect at the creation margin, I also show that firing costs imply relatively higher destruction for financially restricted firms. I present a model that develops these ideas and show that the presence of firing costs has a stronger negative effect on production levels of firms facing liquidity constraints. Regression analysis, based on country industry panel data sets, provides empirical evidence in line with the liquidity service effect of firing costs proposed. I reject the hypothesis that the effect of firing costs does not depend on the presence of financial restrictions. I find a relatively stronger negative effect of firing costs on the output of industries with higher liquidity requirements and a relatively stronger negative effect of firing costs on the output of small firms Online-Ausg http://elibrary.imf.org/view/IMF001/08397-9781451866841/08397-9781451866841/08397-9781451866841.xml Verlag URL des Erstveröffentlichers Volltext |
| spellingShingle | Bennett, Herman Z. Labor's Liquidity Service and Firing Costs |
| title | Labor's Liquidity Service and Firing Costs |
| title_auth | Labor's Liquidity Service and Firing Costs |
| title_exact_search | Labor's Liquidity Service and Firing Costs |
| title_exact_search_txtP | Labor's Liquidity Service and Firing Costs |
| title_full | Labor's Liquidity Service and Firing Costs Bennett, Herman Z |
| title_fullStr | Labor's Liquidity Service and Firing Costs Bennett, Herman Z |
| title_full_unstemmed | Labor's Liquidity Service and Firing Costs Bennett, Herman Z |
| title_short | Labor's Liquidity Service and Firing Costs |
| title_sort | labor s liquidity service and firing costs |
| url | http://elibrary.imf.org/view/IMF001/08397-9781451866841/08397-9781451866841/08397-9781451866841.xml |
| work_keys_str_mv | AT bennetthermanz laborsliquidityserviceandfiringcosts |