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Multiple Equilibria in a Firing Game With Impartial Justice

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Author Info

  • Besancenot, Damien

    ()
    (Université Paris 13 and CEPN)

  • Vranceanu, Radu

    ()
    (ESSEC Business School)

Abstract

In many European countries, a majority of employees are hired under very protective labor contracts that restrict the ability of the employer to dismiss them. In particular, employees can take to courts the firm's layoff motive. This paper analyses the interaction between firms, employees and the labor judicial system specific to South European countries. If judges' error margin increases when the judicial system is subject to congestion, the game presents multiple equilibria which differ in the frequency of workers abusively fired for personal motives. Policy implications can be inferred.

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Bibliographic Info

Paper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number DR 07025.

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Length: 27 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:ebg:essewp:dr-07025

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Postal: ESSEC Research Center, BP 105, 95021 Cergy, France
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Web page: http://www.essec.edu/
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Related research

Keywords: EPL; Labor judges; Firing costs; Layoff motive; Multiple equilibria;

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References

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  1. Kaplow, Louis & Shavell, Steven, 2002. "Economic analysis of law," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 25, pages 1661-1784 Elsevier.
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  3. repec:hal:cepnwp:halshs-00203176 is not listed on IDEAS
  4. Besancenot, Damien & Vranceanu, Radu, 2007. "Multiple Equilibria in a Firing Game With Impartial Justice," ESSEC Working Papers DR 07025, ESSEC Research Center, ESSEC Business School.
  5. Giuseppe BERTOLA & Tito BOERI & Sandrine CAZES, 2000. "Employment protection in industrialized countries: The case for new indicators," International Labour Review, International Labour Organization, vol. 139(1), pages 57-72, 03.
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Citations

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Cited by:
  1. Fraisse, H. & Kramarz, F. & Prost, C., 2009. "Labor Court Inputs, Judicial Cases Outcomes and Labor Flows: Identifying Real EPL," Working papers 256, Banque de France.
  2. Besancenot, Damien & Vranceanu, Radu, 2009. "Multiple equilibria in a firing game with impartial justice," Labour Economics, Elsevier, vol. 16(3), pages 262-271, June.
  3. Baumann, Florian & Friehe, Tim, 2012. "On the evasion of employment protection legislation," Labour Economics, Elsevier, vol. 19(1), pages 9-17.
  4. repec:hal:wpaper:halshs-00382585 is not listed on IDEAS
  5. Goerke, Laszlo & Pannenberg, Markus, 2009. "An economic analysis of dismissal legislation: Determinants of severance pay in West Germany," Center for European, Governance and Economic Development Research Discussion Papers 87, University of Goettingen, Department of Economics.

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