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The response of wages to protective labor legislation: Evidence from Canada

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  • Jane Friesen

Abstract

Using micro data from the 1986-87 Canadian Labour Market Activity Survey, the author examines the wage effect of laws requiring advance notice of layoffs and in some cases also requiring severance payments to laid-off workers. The results suggest that incumbent workers protected by advance notice and severance pay laws were able to extract higher wages than were incumbent workers unprotected by such laws. There is evidence, however, that the ultimate wage effect differed by workers' union status: starting wages of nonunion workers appear to have fallen to offset the subsequent wage increase, indicating that nonunion workers may "pay for" advance notice and severance pay laws, whereas union workers who were protected by such laws seem to have been able to exploit their bargaining position to increase their lifetime earnings. (Abstract courtesy JSTOR.)

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 49 (1996)
Issue (Month): 2 (January)
Pages: 243-255

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Handle: RePEc:ilr:articl:v:49:y:1996:i:2:p:243-255

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Cited by:
  1. Vasileios Gkionakis, 2004. "Short Job Tenures and Firing Taxes in the Search Theory of Unemployment," CEP Discussion Papers dp0628, Centre for Economic Performance, LSE.
  2. Friesen, Jane, 2005. "Statutory firing costs and lay-offs in Canada," Labour Economics, Elsevier, vol. 12(2), pages 147-168, April.
  3. Vasileios Gkionakis, 2004. "Short job tenures and firing taxes in the search theory of unemployment," LSE Research Online Documents on Economics 19964, London School of Economics and Political Science, LSE Library.
  4. Alain Delacroix, 2003. "Transitions into Unemployment and the Nature of Firing Costs," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 651-671, July.
  5. Bornhäll, Anders & Daunfeldt, Sven-Olov & Rudholm, Niklas, 2014. "Employment Protection Legislation and Firm Growth: Evidence from a Natural Experiment," HUI Working Papers 102, HUI Research.

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