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Just-Cause Employment Policies in the Presence of Worker Adverse Selection

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Levine, David I

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Abstract

The free market may not lead to the efficient level of just-cause employment protection if workers are heterogeneous. Any firm that switches to just cause will attract a disproportionate share of workers that provide low effort, yet are difficult to dismiss with cause. Thus, there is an externality concerning each firm's just-cause policy. If all firms had just-cause policies, then the efficiency gains of just cause might outweigh the burden of the undesirable workers. Nevertheless, no single firm may find it in its interest to switch to just cause. It is possible for laws that require just cause to increase efficiency. Copyright 1991 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): 9 (1991)
Issue (Month): 3 (July)
Pages: 294-305
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Handle: RePEc:ucp:jlabec:v:9:y:1991:i:3:p:294-305

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  1. Koeniger, Winfried, 2002. "Employment Protection, Product Market Competition and Growth," IZA Discussion Papers 554, Institute for the Study of Labor (IZA). [Downloadable!]
  2. David H. Autor & William R. Kerr & Adriana D. Kugler, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," IZA Discussion Papers 2571, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Alan Krueger, 1994. "Observations on Employment-Based Government Mandates, With Particular Reference to Health Insurance," Working Papers 702, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  4. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," JCPR Working Papers 153, Northwestern University/University of Chicago Joint Center for Poverty Research.
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  5. Adriana D. Kugler, 1997. "Employee Referrals and the Inter-industry Wage Structure," Economics Working Papers 252, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  6. Harvey S. James & Derek M. Johnson, 2000. "Just-cause provisions, severance pay, and the efficiency wage hypothesis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 83-88.
  7. Koeniger, Winfried, 2003. "Collective Dismissal Cost, Product Market Competition and Innovation," IZA Discussion Papers 888, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Kugler, Adriana D. & Saint-Paul, Gilles, 2000. "Hiring and Firing Costs, Adverse Selection and Long-term Unemployment," IZA Discussion Papers 134, Institute for the Study of Labor (IZA). [Downloadable!]
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  9. Addison, John T. & Barret, C. R. & Siebert, W. S., 1998. "Mandated benefits, welfare, and heterogeneous firms," ZEW Discussion Papers 98-46, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  10. James B. Rebitzer & Lowell J. Taylor, 1991. "Do Labor Markets Provide Enough Short Hour Jobs? An Analysis of Work Hours and Work Incentives," NBER Working Papers 3883, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. John T. Addison & C. R. Barrett & W. S. Siebert, 2005. "Building Blocks in the Economics of Mandates," IZA Discussion Papers 1866, Institute for the Study of Labor (IZA). [Downloadable!]
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  12. 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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  13. David H. Autor & John J. Donohue III & Stewart J. Schwab, 2003. "The Costs of Wrongful-Discharge Laws," NBER Working Papers 9425, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Peter Hans Matthews, 2005. "Labor Discipline, Reputation and Underemployment Traps," Middlebury College Working Paper Series 0501, Middlebury College, Department of Economics. [Downloadable!]
  15. 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)
  16. Laszlo Goerke & Markus Pannenberg, 2005. "Severance Pay and the Shadow of the Law: Evidence for West Germany," Discussion Papers of DIW Berlin 541, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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