Working Papers present research work by both Danmarks Nationalbank’s employees and our partners. Working Papers are primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.
Safety in Unemployment and Risky Experimentation of Young Firms
We develop a theory showing how lower job-loss costs reduce the wage premium required to work for risky young firms. Lower labour costs encourage experimentation with high growth potential and increase productivity. Because experimentation cannot be observed directly, we exploit its life-cycle structure, where risk is concentrated among young firms and resolved as firms mature.
The Working Papers of Danmarks Nationalbank describe research and development, often still ongoing, as a contribution to the professional debate. The viewpoints and conclusions stated are the responsibility of the individual contributors, and do not necessarily reflect the views of Danmarks Nationalbank.