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Effects of employer-provided severance benefits on reemployment outcomes

  • Yolanda K. Kodrzycki
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    Surveys have shown that many employers offer severance packages to their laid-off workers and that severance pay provides substantial income for many people displaced from long-time jobs. Yet little, if anything , is known about the effects of severance pay. Does it lead people to alter the intensity of their job search or their decisions to take advantage of retraining opportunities? Does it enable them to hold out for better-paying jobs? ; The author forges new ground with this study by combining information from an administrative data base on displaced workers from Massachusetts that includes the names of their previous employers with severance plan summaries obtained from a subset of these employers. She finds that severance recipients in Massachusetts returned to work more slowly than nonrecipients in the early 1990's, even after adjusting for other factors such as local unemployment rates and demographic characteristics that may have played an independent role. Severance benefits had some positive impact on enrollments in remedial and basic education programs but no consequences for reemployment pay.

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    File URL: http://www.bostonfed.org/economic/neer/neer1998/neer698c.htm
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    Article provided by Federal Reserve Bank of Boston in its journal New England Economic Review.

    Volume (Year): (1998)
    Issue (Month): Nov ()
    Pages: 41-68

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    Handle: RePEc:fip:fedbne:y:1998:i:nov:p:41-68
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    1. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
    2. Robert Tannenwald & Christopher J. O'Leary, 1997. "Unemployment insurance policy in New England: background and issues," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-22.
    3. Fallick, B.C., 1989. "The Industrial Mobility Of Displaced Workers," Papers 1, California Los Angeles - Applied Econometrics.
    4. Stephen A. Woodbury, 2009. "Unemployment," Book chapters authored by Upjohn Institute researchers, in: Kenneth G. Dau-Schmidt & Seth D. Harris & Orley Lobel (ed.), Labor and Employment Law and Economics, volume 2, pages 480-516 W.E. Upjohn Institute for Employment Research.
      • Stephen A. Woodbury, 2009. "Unemployment," Chapters, in: Labor and Employment Law and Economics, chapter 17 Edward Elgar.
    5. Nickell, S J, 1979. "The Effect of Unemployment and Related Benefits on the Duration of Unemployment," Economic Journal, Royal Economic Society, vol. 89(353), pages 34-49, March.
    6. Stephen A. Woodbury & Murray Rubin, 1997. "The Duration of Benefits," Book chapters authored by Upjohn Institute researchers, in: Christopher J. O'Leary & Stephen A. Wandner (ed.), Unemployment Insurance in the United States: Analysis of Policy Issues, chapter 6, pages 211-283 W.E. Upjohn Institute for Employment Research.
    7. Paul T Decker, 1997. "Work Incentives and Disincentives," Mathematica Policy Research Reports e09c4ee64359405c8a52e13c4, Mathematica Policy Research.
    8. Christopher J. O'Leary & Murray Rubin, 1997. "Adequacy of the Weekly Benefit Amount," Book chapters authored by Upjohn Institute researchers, in: Christopher J. O'Leary & Stephen A. Wandner (ed.), Unemployment Insurance in the United States: Analysis of Policy Issues, chapter 5, pages 163-210 W.E. Upjohn Institute for Employment Research.
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