| Number |
CREPEDP-158 |
| Publication Date |
(July 2024; revised in September 2024) |
| Title |
"Population Growth, Employment Protection, and Firm-level
Distortions"
|
| Author |
Cheng Chen and Takahiro Hattori
|
| Abstract |
Declining population growth and the existence of firm-level distortions are impor-
tant real-world phenomena. In this paper, we set up a firm dynamics model to study
firm-level distortions induced by the firing cost through the lens of population growth.
The negative impact of the firing cost on aggregate productivity is larger when the
population growth rate declines, since slower population growth leads to fewer entrants
and exiting firms which are less troubled by the firing cost. Using Japanese plant-level
data, we calibrate the model and implement counterfactual analysis. Importantly, we
provide direct evidence on how population growth affects plant-level labor distortions.
|
| Keywords |
population growth, employment protection and firing cost, firm-level
distortions
|
| Other information |
Paper in English (26 pages) |