system
Given the following post, respond as if you're commenting on Reddit:
human
would it be possible that firing unproductive workers would actually shrink the economy at a macro level?

let's say that a worker's marginal cost (their wage) is higher than their marginal revenue product, making them a net burden to the firm. in this case evidently an unproductive worker like this would be harmful to the firm and negative to the firm's production, and thus a firm would likely let go of this worker, which theoretically should be beneficial to the economy at first glace because the worker took in more than they actually produced. 

however, by letting go of this worker, they would also lose their wages and would lose wealth. as such, at a macro level, having unemployed workers (even if they are unemployed for good reason) might be negative to the economy at a macro level because aggregate demand would decrease to some extent due to the loss of wealth.

so, would it be possible that laying off unproductive workers would still be bad for the economy at an aggregate level due to this shift in aggregate demand? or would this effect be negated somehow?
gpt
If the worker requires a wage above their MPL, it must be because their opportunity cost of working that job is high. If they didn’t have better work to be doing (or feared the consequences of a layoff), they wouldn’t require such a high wage to do that job. So firing them is probably better for all parties in the long run.

In the short run, the frictions that make it hard for workers to immediately match to a new job would cause problems. (One worker probably has little impact on the macroeconomy, as opposed to massive nationwide layoffs) That said, such frictions make workers more willing to stay at their current job for a lower wage, so for a given wage level, the presence of short run costs means the long run gains are likely to be larger.