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Princeton University Library Catalog
Labor's Liquidity Service and Firing Costs [electronic resource].
Bennett, Herman Z.
Washington : International Monetary Fund, 2007.
1 online resource (36 p.)
IMF Working Papers
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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 relat
Description based upon print version of record.
Contents; I. Introduction; Figures; 1. ELP Index; II. Labor's Liquidity Service and Firing Costs; A. The Setting; B. The Problem of the Entrepreneur; C. Optimal Scale; D. The Effect of Firing Costs; III. Empirical Analysis; A. Empirical Analysis: Liquidity Requirements; Tables; 1. The Effect of the Interaction Between Firing Costs and Liquidity Requirements: Main Results; 2. The Effect of the Interaction Between Firing Costs and Liquidity Requirements: Robustness Checks; 3. The Effect of the Interaction Between Firing Costs and Liquidity Requirements: Asset Collateralization
B. Empirical Analysis: Small Firms2. Difference in Difference; 4. The Effect of Firing Costs on Small Firms' Market Participation: Main Results; IV. Conclusion; Appendixes; I. Deriving the Threshold WB; II. The Effect of Optimal Scale on the Expected Value of Labor; III. First Order Condition L- > 0; IV. Composition of the Samples; Appendix Tables; A1. Manufacturing Sample (Countries); A2. Manufacturing Sample (Industries); A3. EU-15 Sample; References
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