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Short-Time Compensation: Job Security, and Employment Contracts: Evidence from Selected OECD Countries

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  • Van Audenrode, Marc A
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    In this paper, a model of optimal employment contracting describes differences across countries in firing restrictions and short-time compensation systems for workers forced to work shorter hours to avoid layoff. The model predicts that the existence of a short-time compensation system will generate major fluctuations in working hours only if the short-time compensation system is more generous than the traditional unemployment insurance system. A test performed for ten OECD countries shows that in countries with generous short-time compensation systems, the speed of adjustment of total hours worked is higher than in the United States, despite a much slower adjustment in the number of workers employed. Copyright 1994 by University of Chicago Press.

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    File URL: http://dx.doi.org/10.1086/261922
    File Function: full text
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    Article provided by University of Chicago Press in its journal Journal of Political Economy.

    Volume (Year): 102 (1994)
    Issue (Month): 1 (February)
    Pages: 76-102

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    Handle: RePEc:ucp:jpolec:v:102:y:1994:i:1:p:76-102
    Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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    1. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security and Work Force Adjustment: How Different are U.S. and Japanese Practices?," Book chapters authored by Upjohn Institute researchers,in: Christopher F. Buechtemann (ed.), Employment Security and Labor Market Behavior: Interdisciplinary Approaches and International Evidence, pages 180-199 W.E. Upjohn Institute for Employment Research.
    2. Nadiri, M Ishaq & Rosen, Sherwin, 1969. "Interrelated Factor Demand Functions," American Economic Review, American Economic Association, vol. 59(4), pages 457-471, Part I Se.
    3. Samuel Bentolila & Giuseppe Bertola, 1990. "Firing Costs and Labour Demand: How Bad is Eurosclerosis?," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 381-402.
    4. Topel, Robert H, 1982. "Inventories, Layoffs, and the Short-Run Demand for Labor," American Economic Review, American Economic Association, vol. 72(4), pages 769-787, September.
    5. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-957, October.
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