Do Fringe Benefits Cause Layoffs?
by Geoffrey A. Jehle and Marc O. Lieberman (Oct. 1990)
It is commonly believed that firms prefer layoffs to worksharing, in part, because layoffs economize on fringe benefit costs. We find that when labor markets are characterized by optimal implicit contracts, layoffs will never occur in equilibrium, regardless of the level of fringe benefits.
Published: Journal of Post-Keynesian Economics, Winter 1997-98