Firing costs, severance payments, judicial mistakes and unemployment
AbstractIn the discussion about employment protection, little attention has been given to judicial mistakes. In most countries, only in the case of dismissals due to economic reasons, the employee is entitled to a severance payment. Given judicial mistakes when reviewing a dismissal, shirkers might falsely receive a severance payment while non-shirker might not. At fighting unemployment, increasing the level of severance payments can increase employment for small judicial mistakes and effectively dominate the pure firing costs which leave ambiguous effects on employment. For large judicial mistakes, the opposite can hold and severance payments can decrease employment.
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Bibliographic InfoArticle provided by Elsevier in its journal Labour Economics.
Volume (Year): 15 (2008)
Issue (Month): 6 (December)
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Web page: http://www.elsevier.com/locate/labeco
J 41 J 64 J 65 J 68 Employment protection Judicial mistakes Matching models Shirking Unemployment;
Other versions of this item:
- Nikolai Stähler, 2006. "Firing Costs, Severance Payments, Judicial Mistakes and Unemployment," Working Papers of the Research Group Heterogenous Labor 06-07, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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