Redundancy Pay and Collective Dismissals
Redundancy payments for collective dismissals are incorporated into a Shapiro-Stiglitz model of efficiency wages. It is shown that a fixed payment will lower wages, leave employment and welfare unaffected if there are no wage-dependent taxes, no additional firing costs and if unemployment benefits are not altered by redundancy payments. If payroll taxes exceed firing costs and unemployment benefits are independent of redundancy pay, employment and welfare will rise with redundancy payments. If these payments are also a function of previous wages, positive employment effects will be mitigated. A substitution of wage-dependent for lump-sum redundancy payments can lower employment, allowing for a continuous variation of effort.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.de
More information through EDIRC
References listed on IDEAS
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.:
- Saint-Paul, Gilles, 1995.
"The High Unemployment Trap,"
The Quarterly Journal of Economics,
MIT Press, vol. 110(2), pages 527-50, May.
- Shapiro, Carl & Stiglitz, Joseph E, 1985. "Equilibrium Unemployment as a Worker Discipline Device: Reply," American Economic Review, American Economic Association, vol. 75(4), pages 892-93, September.
- Fella, Giulio, 2000. "Efficiency wage and efficient redundancy pay," European Economic Review, Elsevier, vol. 44(8), pages 1473-1490, August.
- Pisauro, Giuseppe, 1991. "The effect of taxes on labour in efficiency wage models," Journal of Public Economics, Elsevier, vol. 46(3), pages 329-345, December.
- Booth, Alison L & McCulloch, Andrew, 1999. "Redundancy Pay, Unions and Employment," Manchester School, University of Manchester, vol. 67(3), pages 346-66, June.
- Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
- Chang, Juin-Jen & Lin, Chung-Cheng & Lai, Ching-Chong, 1999. "The Unemployment and Wage Effects of Shifting to an Indirect Tax in an Efficiency Wage Model," The Economic Record, The Economic Society of Australia, vol. 75(229), pages 156-66, June.
- Emerson, Michael, 1988. "Regulation or deregulation of the labour market : Policy regimes for the recruitment and dismissal of employees in the industrialised countries," European Economic Review, Elsevier, vol. 32(4), pages 775-817, April.
- Akerlof, George A & Yellen, Janet L, 1985. "A Near-rational Model of the Business Cycle, with Wage and Price Intertia," The Quarterly Journal of Economics, MIT Press, vol. 100(5), pages 823-38, Supp..
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
- Booth, Alison L, 1993.
"Layoffs with Payoffs: A Bargaining Model of Union Wage and Severance Pay Determination,"
CEPR Discussion Papers
843, C.E.P.R. Discussion Papers.
- Booth, Alison L, 1995. "Layoffs with Payoffs: A Bargaining Model of Union Wage and Severance Pay Determination," Economica, London School of Economics and Political Science, vol. 62(248), pages 551-64, November.
- MacLeod, W.B. & Malcomson, J.M., 1994.
"Turnover costs, efficiency wages and cycles,"
Discussion Paper Series In Economics And Econometrics
9410, Economics Division, School of Social Sciences, University of Southampton.
- Burda, Michael C, 1992. " A Note on Firing Costs and Severance Benefits in Equilibrium Unemployment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(3), pages 479-89.
- Pissarides, Christopher A., 2001. "Employment protection," Labour Economics, Elsevier, vol. 8(2), pages 131-159, May.
- Cristina Pita, 1997. "Breach Penalties in Labour Contracts: Advance Notice and Severance Pay," LABOUR, CEIS, vol. 11(3), pages 469-495, November.
- Goerke, Laszlo, 2000. "On the structure of unemployment benefits in shirking models," Labour Economics, Elsevier, vol. 7(3), pages 283-295, May.
- Saint-Paul, Gilles, 2000. "The Political Economy of Labour Market Institutions," OUP Catalogue, Oxford University Press, number 9780198293323, March.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_582. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra)
If references are entirely missing, you can add them using this form.