Publication

This paper provides a survey of the recent literature about firing costs and discusses the transmission channels of firing costs in a partial equilibrium context. In addition, the authors expand their analysis to include two types of firing costs in a New Keynesian model with purely endogenous separation, and assess the impact of respecting versus non-respecting the bonding critique. The authors find that whilst the two types of firing costs do not show significant differences, respecting the bonding critique enhances the overall performance of the model.