Chen, Yu-Fu

Funke, Michael

English

The data indicate that non-wage labour costs in Germany have reached a record high in recent years. From 1972 to 2001, the ratio of non-wage labour costs to direct compensation in West German manufacturing industry rose from 55.6% to 81.2%. The topic of non-wage labour costs is increasingly being discussed among and between the political parties because non-wage labour costs are likely to have major negative effects on employment. We follow the real options approach, which allows us to investigate the value to a firm of waiting to adjust labour when the firm´s revenues are stochastic and adjustment costs are sunk. Simulation exercises show that the interaction between hiring and firing costs, non-wage labour costs and uncertainty can have important ramifications for employment dynamics

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Dundee Discussion Papers in Economics 154:Labour demand in Germany: an assessment on non-wage labour

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https://discovery.dundee.ac.uk/files/106618/DDPE_154.pdf

Dundee Discussion Papers in Economics 154:Labour demand in Germany: an assessment on non-wage labour

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