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Mandatory Notice

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Author Info
Kuhn, Peter

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Abstract

Firms' incentives to inform workers about their future viability are analyzed using a two-period signaling model. The author finds that, if wages can be set after firms learn their viability, they will perfectly signal firms' closure plans. Mandatory-notice laws, if they have any effect at all, reduce worker utility and raise profits because they obviate the need for "permanent" firms to signal via higher wages. If a noncontingent wage must be set before any private information arrives, pooling occurs in the absence of legislation and mandatory-notice laws can be Pareto improving. Copyright 1992 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 10 (1992)
Issue (Month): 2 (April)
Pages: 117-37
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Handle: RePEc:ucp:jlabec:v:10:y:1992:i:2:p:117-37

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  2. Peter Rühmann & Jens Südekum, 2001. "Severance Payments and Firm-Specific Human Capital," Departmental Discussion Papers 111, University of Goettingen, Department of Economics. [Downloadable!]
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  3. Christopher J. Ruhm & Jackqueline L. Teague, 1995. "Parental Leave Policies in Europe and North America," NBER Working Papers 5065, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Christopher J. Ruhm, 1996. "The Economic Consequences of Parental Leave Mandates: Lessons from Europe," NBER Working Papers 5688, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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