Firing Costs Deter Risky Innovation

European layoff costs—estimated at 31 months of wages in Germany and 38 in France—turn portfolio bets on moonshot projects into bad economics because most attempts fail and require fast, large‑scale redundancies. Firms instead favor incremental upgrades that avoid triggering costly, years‑long restructuring. By contrast, U.S. firms can kill projects and reallocate talent quickly, sustaining a higher rate of disruptive bets. — It reframes innovation policy by showing labor‑law design can silently tax failure and suppress moonshots, shaping transatlantic tech competitiveness.