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dismissal costs and unemployment

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Please explain the effect of dismissal costs increasing unemployment and the effects on the natural rate of unemployment, rate of vacancies, separation rate, and job finding rate.

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Solution Summary

How dismissal costs can result in increasing unemployment rates is determined. The rate of vacancies, separation rate and job finding rates are determined.

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Dismissal costs are very important to employers in determining whether to hire an employee. Employers think ahead, and they know some employees aren't going to turn out well. If there are no dismissal costs, they are more like to give someone a trial run. But this becomes too expensive if dismissal costs are high. They ...

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