Abstract
In the same vein as Blanchard and Tirole (2008) First Pass, this note shows that, under the condition for equilibrium stability, the partial implementation of layoff taxes invariably increases firms' profits as well as workers' utilities by lowering payroll taxes. It also proves that requiring stability does not raise any equilibrium existence issue per se: since the budget constraint of unemployment compensation induces multiple equilibria, the condition for stability simply permits the selection of one of these equilibria. These insights could favor the introduction of firing taxes, which in practice would probably be a gradual process
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
