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Layoff Costs and Efficiency with Asymmetric Information

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  • Alain Delacroix

    (CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi [Montréal] - UQAM - Université du Québec à Montréal = University of Québec in Montréal)

  • Etienne Wasmer

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

Wage determination under asymmetric information generates ine¢ ciencies due to excess turnover. Severance pay and layo¤ taxes can improve e¢ ciency. We show that inefficient separations can even be fully removed with xed separation taxes in the case where therelevant private information is exponentially distributed.

Suggested Citation

  • Alain Delacroix & Etienne Wasmer, 2009. "Layoff Costs and Efficiency with Asymmetric Information," Working Papers hal-00972915, HAL.
    • Handle: RePEc:hal:wpaper:hal-00972915
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-00972915
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    References listed on IDEAS

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    Cited by:

    1. Stupnytska, Yuliia, 2015. "Asymmetric information in a search model with social contacts," Center for Mathematical Economics Working Papers 548, Center for Mathematical Economics, Bielefeld University.

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    More about this item

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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