Do Larger Severance Payments Increase Individual Job Duration?
AbstractThis paper analyzes the effect of severance payments on the probability of separation at given tenure, wages and other individual and firm characteristics. It studies a mandatory deferred wage scheme of the Italian labour market (Trattamento di Fine Rapporto, TFR). Deferred wages increase job duration if two conditions hold: wages are rigidly set outside the employer-employee relationship, and past provisions are accumulated at interest rates that are below market rates. Under such circumstances, workers who withdraw from their accumulated stock of unpaid wages should experience, at given tenure, a subsequent increase in the probability of separation. This prediction appears empirically robust and quantitatively sizeable. A withdrawal of 60% of the TFR stock 60% of the TFR stock (the median observed withdrawal) increases the instantaneous hazard rate by almost 20%. In other words, an individual with at least ten years of tenure that experiences an early withdrawal increases his/her hazard rate from 10% to about 12%. The empirical result takes into account the existence of unobserved heterogeneity and a variety of further robustness tests.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2004 Meeting Papers with number 445b.
Date of creation: 2004
Date of revision:
Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Other versions of this item:
- Garibaldi, Pietro & Pacelli, Lia, 2008. "Do larger severance payments increase individual job duration?," Labour Economics, Elsevier, vol. 15(2), pages 215-245, April.
- Garibaldi, Pietro & Pacelli, Lia, 2004. "Do Larger Severance Payments Increase Individual Job Duration?," CEPR Discussion Papers 4607, C.E.P.R. Discussion Papers.
- Pietro Garibaldi & Lia Pacelli, 2007. "Do Larger Severance Payments Increase Individual Job Duration?," Carlo Alberto Notebooks 39, Collegio Carlo Alberto.
- J0 - Labor and Demographic Economics - - General
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joel L. Horowitz & Sokbae Lee, 2002.
"Semiparametric Estimation of a Panel Data Proportional Hazards Model with Fixed Effects,"
10th International Conference on Panel Data, Berlin, July 5-6, 2002
A5-3, International Conferences on Panel Data.
- Horowitz, Joel L. & Lee, Sokbae, 2004. "Semiparametric estimation of a panel data proportional hazards model with fixed effects," Journal of Econometrics, Elsevier, vol. 119(1), pages 155-198, March.
- Joel Horowitz & Sokbae 'Simon' Lee, 2002. "Semiparametric estimation of a panel data proportional hazards model with fixed effects," CeMMAP working papers CWP21/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- Bertola, Giuseppe, 1999. "Microeconomic perspectives on aggregate labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 45, pages 2985-3028 Elsevier.
- Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-38, October.
- Devicienti, Francesco & Maida, Agata & Pacelli, Lia, 2008.
"The resurrection of the Italian wage curve,"
Elsevier, vol. 98(3), pages 335-341, March.
- Francesco Devicienti & Agata Maida & Lia Pacelli, 2006. "The Resurrection of the Italian Wage Curve," LABORatorio R. Revelli Working Papers Series 52, LABORatorio R. Revelli, Centre for Employment Studies.
- Devicenti francesco & Maida Agata & Pacelli Lia, 2005. "The Resurrection of the Italian Wage Curve," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200502, University of Turin.
- Ichino, Andrea & Polo, Michele & Rettore, Enrico, 2003.
"Are judges biased by labor market conditions?,"
European Economic Review,
Elsevier, vol. 47(5), pages 913-944, October.
- Farber, Henry S., 1999. "Mobility and stability: The dynamics of job change in labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 37, pages 2439-2483 Elsevier.
- Garibaldi, Pietro & Pacelli, Lia & Borgarello, Andrea, 2003.
"Employment Protection Legislation and the Size of Firms,"
IZA Discussion Papers
787, Institute for the Study of Labor (IZA).
- Pietro Garibaldi & Lia Pacelli & Andrea Borgarello, 2004. "Employment Protection Legislation and the Size of Firms," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(1), pages 33-68, April.
- Pietro Garibaldi & Lia Pacelli & Andrea Borgarello, 2003. "Employment Protection Legislation and the Size of Firms," Working Papers 247, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Andrea Borgarello & Pietro Garibaldi & Lia Pacelli, 2003. "Employment Protection Legislation and the Size of Firms," LABORatorio R. Revelli Working Papers Series 23, LABORatorio R. Revelli, Centre for Employment Studies.
- Pietro Garibaldi & Giovanni L. Violante, 2005.
"The Employment Effects of Severance Payments with Wage Rigidities,"
Royal Economic Society, vol. 115(506), pages 799-832, October.
- Garibaldi, Pietro & Violante, Giovanni L, 2004. "The Employment Effects of Severance Payments with Wage Rigidities," CEPR Discussion Papers 4608, C.E.P.R. Discussion Papers.
- Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
- Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-38, February.
- Lars Ljungqvist, 2002. "How Do Lay--off Costs Affect Employment?," Economic Journal, Royal Economic Society, vol. 112(482), pages 829-853, October.
- Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, 09.
- Antonio Romero Medina & Mateo Triossi, 2007.
"Games of capacities : a (close) look to Nash Equilibria,"
Economics Working Papers
we075933, Universidad Carlos III, Departamento de Economía.
- Antonio Romero-Medina & Matteo Triossi, 2007. "Games of Capacities: A (Close) Look to Nash Equilibria," Carlo Alberto Notebooks 52, Collegio Carlo Alberto.
- Antonio Romero-Medina & Matteo Triossi, 2011. "Games with capacity manipulation : incentives and Nash equilibria," Economics Working Papers we1125, Universidad Carlos III, Departamento de Economía.
- Antonio Romero-Medina & Matteo Triossi, 2011. "Games with Capacity Manipulation: Incentives and Nash Equilibria," Documentos de Trabajo 280, Centro de Economía Aplicada, Universidad de Chile.
- Ashok Thomas & Luca Spataro, 2013. "Pension funds and Market Efficiency: A review," Discussion Papers 2013/164, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
- Carolina Fugazza, 2011. "Tracking the Italian employees'TFR over their working life careers," CeRP Working Papers 125, Center for Research on Pensions and Welfare Policies, Turin (Italy).
- Naticchioni, Paolo & Rustichelli, Emiliano & Scialà, Antonio, 2006.
"Employment protection and regional worker flows in Italy,"
1690, University Library of Munich, Germany.
- Naticchioni Paolo & Rustichelli Emiliano & Scialà Antonio, 2006. "Employment Protection and Regional Worker Flows in Italy," Economia politica, Società editrice il Mulino, issue 3, pages 453-474.
- Riccardo Calcagno & Roman Kraeussl & Chiara Monticone, 2008.
"An Analysis of the Effects of the Severance Payment Reform on Credit to Italian SMEs,"
Tinbergen Institute Discussion Papers
08-107/2, Tinbergen Institute.
- Riccardo Calcagno & Roman Kraeussl & Chiara Monticone, 2011. "An analysis of the effects of the severance payment reform on credit to Italian SMEs," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 3(3), pages 243-261, August.
- Grassi, Emanuele, 2009. "EPL and Job Contract Conversion Rate: The Italian CFL Case," MPRA Paper 12679, University Library of Munich, Germany.
- Riccardo Calcagno & Roman Kraeussl & Chiara Monticone, 2008. "An Analysis of the Effects of the Severance Payment Reform on Credit to Italian SMEs," Tinbergen Institute Discussion Papers 08-107/2, Tinbergen Institute.
- Steffen Ahrens & Dennis Wesselbaum, 2009. "On the Introduction of Firing Costs," Kiel Working Papers 1559, Kiel Institute for the World Economy.
- Vincenzo Carrieri & Cinzia Di Novi & Rowena Jacobs & Silvana Robone, 2012. "Well-being and psychological consequences of temporary contracts: the case of younger Italian employees," Working Papers 079cherp, Centre for Health Economics, University of York.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).
If references are entirely missing, you can add them using this form.