Layoffs reflect employer-initiated job separations that play an important role in frictional and cyclical unemployment. The relative importance of temporary and permanent layoffs and layoffs themselves has varied over time, and understanding the factors underlying this variation is important for understanding fluctuations in frictional and cyclical unemployment over time. Modern models of labour market dynamics often emphasize the layoffs associated with endogenous job destruction at the firm level induced by the interaction of aggregate and firm-specific shocks.
KeywordsBusiness cycles Cyclical unemployment Hold-up problem Implicit contracts Information capital Labour market search Layoffs Search and matching models Job creation and destruction
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