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The Effect of Dismissals Protection on Employment: More on a Vexed Theme

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Author Info
John T. Addison
Paulino Teixeira
Jean-Luc Grosso

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Abstract

This paper presents new results on the relationship between severance pay and labor market performance for a sample of 21 OECD countries, 1956–1984. Specifically, it evaluates Lazear’s empirical argument that severance pay reduces employment and elevates joblessness. His findings are shown not to survive correction for errors in the data and the application of correct estimation procedures. Furthermore, adverse labor market consequences of severance pay are not detected in a dynamic characterization of the Lazear model. Limitations of the approach followed here are also addressed and contextualized.

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Publisher Info
Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 67 (2000)
Issue (Month): 1 (July)
Pages: 105-122
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Handle: RePEc:sej:ancoec:v:67:1:y:2000:p:105-122

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  1. John T. Addison & Paulino Teixeira, 2004. "What Have We Learned About The Employment Effects of Severance Pay? Further Iterations of Lazear et al," GEMF Working Papers 2004-02, GEMF - Faculdade de Economia, Universidade de Coimbra. [Downloadable!]
    Other versions:
  2. Bertola, Giuseppe & Blau, Francine D & Kahn, Lawrence, 2001. "Comparative Analysis of Labour Market Outcomes: Lessons for the US from International Long-Run Evidence," CEPR Discussion Papers 3023, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," RES Working Papers 4301, Inter-American Development Bank, Research Department. [Downloadable!]
    Other versions:
  4. Addison, John T. & Teixeira, Paulino, 2001. "Employment Adjustment in Portugal: Evidence from Aggregate and Firm Data," IZA Discussion Papers 391, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Christian Grund, 2006. "Severance payments for dismissed employees in Germany," European Journal of Law and Economics, Springer, vol. 22(1), pages 49-71, July. [Downloadable!] (restricted)
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  6. Christian Grund, 2004. "Severance Payments for Dismissed Employees Severance Payments for Dismissed Employees in Germany," Bonn Econ Discussion Papers bgse4_2004, University of Bonn, Germany. [Downloadable!]
  7. James Heckman & Carmen Pages, 2003. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Working Papers 10129, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Beissinger, Thomas, 2003. "Strukturelle Arbeitslosigkeit in Europa : eine Bestandsaufnahme (Structural unemployment in Europe * an inventory)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 36(4), pages 411-427. [Downloadable!]
  9. Beissinger, Thomas, 2004. "Strukturelle Arbeitslosigkeit in Europa: Eine Bestandsaufnahme," Regensburger Diskussionsbeiträge zur Wirtschaftswissenschaft 389, University of Regensburg, Department of Economics. [Downloadable!]
  10. Ricardo Caballero & Kevin N. Cowan & Eduardo M. R. A. Engel & Alejandro Micco, 2004. "Effective labor regulation and microeconomic flexibility," Working Papers 04-6, Federal Reserve Bank of Boston. [Downloadable!]
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  11. Eduardo Lora & Ugo Panizza, 2002. "Las reformas estructurales en América Latina bajo la lupa," RES Working Papers 4302, Inter-American Development Bank, Research Department. [Downloadable!]
  12. Arias, Omar & Blom, Andreas & Bosch, Mariano & Cunningham, Wendy & Fiszbein, Ariel & Lopez Acevedo, Gladys & Maloney, William & Saavedra, Jaime & Sanchez-Paramo, Carolina & Santamaria, Mauricio & Siga, 2005. "Pending issues in protection, productivity growth, and poverty reduction," Policy Research Working Paper Series 3799, The World Bank. [Downloadable!]
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