Severance pay and the accuracy of judgment
AbstractWe show that the severance pay scheme can serve as bond and improve the welfare. When the authority appropriately adjudges the worker's effort, the increase in a severance payment reduces the shirker''s expected benefit, so that the severance pay works as a bond, which is warranted by the authority.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 10 (2006)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- J4 - Labor and Demographic Economics - - Particular Labor Markets
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
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- José Enrique Galdón Sánchez & Maia Güell, 2001.
"Dismissal conflicts and unemployment,"
Documentos de Trabajo - Lan Gaiak Departamento de EconomÃa - Universidad PÃºblica de Navarra
0105, Departamento de Economía - Universidad Pública de Navarra.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
- Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
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