October 2003

IZA DP No. 910: On-the-Job Training, Firing Costs and Employment

Pilar Diaz-Vazquez, Dennis J. Snower

published in: Contributions to Economic Analysis & Policy, 2005, 4 (1)

This paper explores the influence of on-the-job training on the employment effect of firing costs. It shows that on-the-job training (generating firm specific skills) causes firing costs to have a contractionary influence on average employment (over the booms and recessions of the business cycle).