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Mandatory Notice


  • Kuhn, Peter


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.

Suggested Citation

  • Kuhn, Peter, 1992. "Mandatory Notice," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 117-137, April.
  • Handle: RePEc:ucp:jlabec:v:10:y:1992:i:2:p:117-37

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    References listed on IDEAS

    1. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-344, October.
    2. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
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    Cited by:

    1. Peter Kuhn, "undated". "Canada and the "OECD Hypothesis": Does Labour Market Inflexibility Explain Canada's High Level of Unemployment?," Canadian International Labour Network Working Papers 10, McMaster University.
    2. 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.
    3. John T. Addison & Paulino Teixeira, 2003. "The Economics of Employment Protection," Journal of Labor Research, Transaction Publishers, vol. 24(1), pages 85-129, January.
    4. Alison L. Booth & Yu-Fu Chen & Gylfi Zoega, 2002. "Hiring and Firing: A Tale of Two Thresholds," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 217-248, Part.
    5. Jens Suedekum & Peter Ruehmann, 2003. "Severance Payments and Firm-specific Human Capital," LABOUR, CEIS, vol. 17(1), pages 47-62, March.
    6. Michele Belot & Jan Boone & Jan Van Ours, 2007. "Welfare-Improving Employment Protection," Economica, London School of Economics and Political Science, vol. 74(295), pages 381-396, August.
    7. Addison, John T & Chilton, John B, 1997. "Nondisclosure as a Contract Remedy: Explaining the Advance-Notice Puzzle," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 143-164, January.
    8. Christopher J. Ruhm, 1998. "The Economic Consequences of Parental Leave Mandates: Lessons from Europe," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 285-317.
    9. John T. Addison & McKinley L. Blackburn, 1994. "The Worker Adjustment and Retraining Notification Act," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 181-190, Winter.

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