Dismissal costs are bound to increase unemployment?

“Dismissal costs are bound to increase unemployment”. Comment on this statement by

discussing the effects of a new regulation makes it more difficult for firms to dismiss their workers,

for example by imposing a firing tax for each worker dismissed. Explain the likely influence of this

policy change on the natural rate of unemployment and the rate of job vacancies. Hint: think of what

happens to the separation and job finding rates.

Dismissal costs are bound to increase unemployment?

1. The harder it is to sack workers, the more reluctant employers are to take them on. So job vacancies will be fewer.

2. Any tax increase on a business will reduce its competitiveness. There may be offsetting benefits, but the first effect of a tax is to encourage import substitution.

3. Any tax on employment will send a price signal that encourages businesses to substitute capital for labour.... therefore increasing unemployment. This is the simplest true answer to your question.

Dismissal costs are bound to increase unemployment?

loan

flow , everything in economics depend on flow. What doesnt in our world? Energy does music does english does drawing now thats an interesting one?

Fashion yes.

Nearly everything depends on flow