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Title:The firing cost implications of alternative severance pay designs PDF Logo
Authors:Parsons, Donald O.
Issue Date:2010
Series/Report no.:Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 4967
Abstract:Economists have concerns about the firing cost implications of mandated severance plans. Analysis reveals that predicted severance plan consequences depend critically on the precise structure of the plan. Whether governments mandate (i) severance insurance plans or (ii) severance savings plans is important; savings plans have no firing cost effects on employer layoff decisions. The firing cost implications of insurance plan are sensitive to the types of job separations that qualify a worker for benefits. Plans that pay benefits across all separations are functionally severance savings plans. The variety of plan types is illustrated using U.S. and international examples.
Subjects:Job displacement
worker turnover
severance pay
firing costs
JEL:J65
J41
J33
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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