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Job Security and the Age-Composition of Employment: Evidence from Chile

Author

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  • Pagés, Carmen
  • Montenegro, Claudio E.

Abstract

This paper develops a simple model to analyze the impact of tenure-based severance payments on firms' hiring and firing decisions. The findings are that under certain conditions, this feature leads to a Last-in First-out firing policy. Also, reforms that increase the slope of the severance-tenure profile tend to increase the probabilities of dismissal of low tenure workers.

Suggested Citation

  • Pagés, Carmen & Montenegro, Claudio E., 1999. "Job Security and the Age-Composition of Employment: Evidence from Chile," IDB Publications (Working Papers) 1093, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:1093
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    Cited by:

    1. Ana Maria Loboguerrero & Ugo Panizza, 2003. "Inflation and Labor Market Flexibility: The Squeaky Wheel Gets the Grease," Research Department Publications 4347, Inter-American Development Bank, Research Department.
    2. Gabriel Montes Rojas & Mauricio Santamaría, 2007. "The Burden of Labour Costs in Mexico," LABOUR, CEIS, vol. 21(1), pages 157-188, March.
    3. MacLeod, W. Bentley, 2011. "Great Expectations: Law, Employment Contracts, and Labor Market Performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 18, pages 1591-1696, Elsevier.
    4. Muñoz Saavedra, Ercio, 2009. "Reformas Estructurales y Productividad Total de Factores [Structural Reforms and Total Factor Productivity]," MPRA Paper 37362, University Library of Munich, Germany.
    5. Janine Berg (ed.), 2015. "Labour Markets, Institutions and Inequality," Books, Edward Elgar Publishing, number 16143, August.
    6. Giuseppina Gianfreda & Giovanna Vallanti, 2020. "Labor Courts and Firing Costs: The Labor‐Market Effects of Trial Delays," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 40-84, January.
    7. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
    8. Claudio Montenegro & Carmen Pagés, 2005. "Who Benefits from Labor Market Regulations? Chile 1960-1998," Central Banking, Analysis, and Economic Policies Book Series, in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.),Labor Markets and Institutions, edition 1, volume 8, chapter 4, pages 077-114, Central Bank of Chile.
    9. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2000), pages 109-154.
    10. Nicola Brandt, 2012. "Reducing Poverty in Chile: Cash Transfers and Better Jobs," OECD Economics Department Working Papers 951, OECD Publishing.
    11. Claudio Montenegro & Carmen Pagés-Serra, 2003. "¿Quién se beneficia con la normativa de los mercados laborales?: Chile, 1960-1998," Research Department Publications 4346, Inter-American Development Bank, Research Department.
    12. Ana Maria Loboguerrero & Ugo Panizza, 2003. "Inflación y flexibilidad del mercado laboral: La rueda que chilla es la que se engrasa," Research Department Publications 4348, Inter-American Development Bank, Research Department.
    13. Görlich, Dennis & Stepanok, Ignat & Al-Hussami, Fares, 2013. "Youth unemployment in Europe and the world: Causes, consequences and solutions," Kiel Policy Briefs 59, Kiel Institute for the World Economy (IfW Kiel).
    14. Amil Petrin & Jagadeesh Sivadasan, 2006. "Job Security Does Affect Economic Efficiency: Theory, A New Statistic, and Evidence from Chile," NBER Working Papers 12757, National Bureau of Economic Research, Inc.
    15. Carmen Pagés-Serra & James J. Heckman, 2000. "El costo de la regulación de la estabilidad laboral: elementos de juicio de los mercados laborales latinoamericanos," Research Department Publications 4228, Inter-American Development Bank, Research Department.
    16. Parsons, Donald O., 2011. "Mandated Severance Pay and Firing Cost Distortions: A Critical Review of the Evidence," IZA Discussion Papers 5776, Institute of Labor Economics (IZA).
    17. Marios Michaelides & Peter Mueser & Jeffrey Smith, 2019. "Youth Unemployment and U.S. Job Search Assistance Policy during the Great Recession," University of Cyprus Working Papers in Economics 13-2019, University of Cyprus Department of Economics.
    18. Donald O. Parsons, 2013. "Understanding severance pay," Cuadernos de Economía - Spanish Journal of Economics and Finance, Asociación Cuadernos de Economía, vol. 36(102), pages 155-165, Diciembre.
    19. Esteban Puentes & Dante Contreras & Claudia Sanhueza, 2007. "Self-Employment in Chile, long run trends and education and age structures changes," Estudios de Economia, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 203-247, December.
    20. Ferrer, Ana M. & Riddell, W. Craig, 2009. "Unemployment insurance savings accounts in Latin America : overview and assessment," Social Protection Discussion Papers and Notes 49173, The World Bank.
    21. Zuzana Potužáková & Stanislava Mildeová, 2015. "Analýza příčin a důsledků nezaměstnanosti mladých v Evropské unii [Analysis of Causes and Consequences of the Youth Unployment in the EU]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(7), pages 877-894.
    22. Horst Feldmann, 2003. "Labor Market Regulation and Labor Market Performance: Evidence Based on Surveys among Senior Business Executives," Kyklos, Wiley Blackwell, vol. 56(4), pages 509-540, November.

    More about this item

    Keywords

    ;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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