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Effects of employer-provided severance benefits on reemployment outcomes

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  • Yolanda K. Kodrzycki
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    Abstract

    Surveys have shown that many employers offer severance packages to their laid-off workers and that severance pay provides substantial income for many people displaced from long-time jobs. Yet little, if anything , is known about the effects of severance pay. Does it lead people to alter the intensity of their job search or their decisions to take advantage of retraining opportunities? Does it enable them to hold out for better-paying jobs? ; The author forges new ground with this study by combining information from an administrative data base on displaced workers from Massachusetts that includes the names of their previous employers with severance plan summaries obtained from a subset of these employers. She finds that severance recipients in Massachusetts returned to work more slowly than nonrecipients in the early 1990's, even after adjusting for other factors such as local unemployment rates and demographic characteristics that may have played an independent role. Severance benefits had some positive impact on enrollments in remedial and basic education programs but no consequences for reemployment pay.

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    Bibliographic Info

    Article provided by Federal Reserve Bank of Boston in its journal New England Economic Review.

    Volume (Year): (1998)
    Issue (Month): Nov ()
    Pages: 41-68

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    Handle: RePEc:fip:fedbne:y:1998:i:nov:p:41-68

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    Related research

    Keywords: Employment (Economic theory) ; Cafeteria benefit plans;

    References

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    1. Robert Tannenwald & Christopher J. O'Leary, 1997. "Unemployment Insurance Policy in New England: Background and Issues," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 97-49, W.E. Upjohn Institute for Employment Research.
    2. Fallick, B.C., 1989. "The Industrial Mobility Of Displaced Workers," Papers, California Los Angeles - Applied Econometrics 1, California Los Angeles - Applied Econometrics.
    3. Christopher J. O'Leary & Murray Rubin, 1997. "Adequacy of the Weekly Benefit Amount," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, in: Christopher J. O'Leary & Stephen A. Wandner (ed.), Unemployment Insurance in the United States: Analysis of Policy Issues, chapter 5, pages 163-210 W.E. Upjohn Institute for Employment Research.
    4. Stephen A. Woodbury, 2009. "Unemployment," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, in: Kenneth G. Dau-Schmidt & Seth D. Harris & Orley Lobel (ed.), Labor and Employment Law and Economics, volume 2, pages 480-516 W.E. Upjohn Institute for Employment Research.
    5. Stephen A. Woodbury & Murray Rubin, 1997. "The Duration of Benefits," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, in: Christopher J. O'Leary & Stephen A. Wandner (ed.), Unemployment Insurance in the United States: Analysis of Policy Issues, chapter 6, pages 211-283 W.E. Upjohn Institute for Employment Research.
    6. Nickell, S J, 1979. "The Effect of Unemployment and Related Benefits on the Duration of Unemployment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 89(353), pages 34-49, March.
    7. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
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    Cited by:
    1. Raj Chetty, 2008. "Moral Hazard vs. Liquidity and Optimal Unemployment Insurance," NBER Working Papers 13967, National Bureau of Economic Research, Inc.
    2. Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 116(2), pages 173-234, 04.
    3. Yolanda K. Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers, Federal Reserve Bank of Boston 07-2, Federal Reserve Bank of Boston.
    4. Christian Grund, 2004. "Severance Payments for Dismissed Employees Severance Payments for Dismissed Employees in Germany," Bonn Econ Discussion Papers, University of Bonn, Germany bgse4_2004, University of Bonn, Germany.
    5. repec:iza:izadps:dp875 is not listed on IDEAS

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