usually the ease of hiring/firing bit is more of "hire the right person for the role", in the sense that a vacated spot can become available for another. but a

usually the ease of hiring/firing bit is more of "hire the right person for the role", in the sense that a vacated spot can become available for another. but also, there is a limited amount of capital in the economy, and so propping an "unhealthy" company up with debt will crowd out new, potentially successful businesses. If there are enough zombie companies around this is enough to paralyze an entire economy. The general observation is that the US has less worker stability, but also bounces back faster than European countries. And the poster child for zombie companies strangling the economy by hoovering up all the credit is post-bubble Japan.