...Dennis Wesselbaum Purpose – The purpose of this paper is to introduce productivity-dependent firing costs into an otherwise standard endogenous separations matching model. The authors suggest an alternative to the standard fix cost approach and account for empirical evidence emphasizing...

... Cycle model and introduces firing costs and severance payments. Labor market frictions are assumed to follow the famous search and matching approach. Findings – The paper finds that firing costs imply a higher volatility over the cycle and have stronger negative welfare effects. Severance payments...