Journal Article

The Interaction of Firing Costs and Firm Training


  • Lechthaler
  • W.
Publication Date

By allowing firms to invest in their workers' human capital, this

paper extends the traditional analysis of firing costs with respect

to two points, both of them positive in terms of welfare. On the one

hand, firing restrictions reduce turnover, thereby enhancing

incentives to provide training.


On the other hand, training gives firms the opportunity to lower the

costs of firing restrictions since well-trained workers are less

likely to be fired. In this way the negative effects of firing costs

on firm profitability and workers' job-finding rates are reduced.


JEL Classification
E24, J24, J63, J68, M53

Key Words

  • Firing Costs
  • Firm Training
  • Human Capital