Multiple Equilibria in a Firing Game With Impartial Justice

Damien Besancenot and Radu Vranceanu

No DR 07025, ESSEC Working Papers from ESSEC Research Center, ESSEC Business School

Abstract: In many European countries, a majority of employees are hired under very protective labor contracts that restrict the ability of the employer to dismiss them. In particular, employees can take to courts the firm's layoff motive. This paper analyses the interaction between firms, employees and the labor judicial system specific to South European countries. If judges' error margin increases when the judicial system is subject to congestion, the game presents multiple equilibria which differ in the frequency of workers abusively fired for personal motives. Policy implications can be inferred.

Keywords: EPL; Labor judges; Firing costs; Layoff motive; Multiple equilibria (search for similar items in EconPapers)
JEL-codes: J32 J53 K31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2007-11
New Economics Papers: this item is included in nep-bec and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Multiple equilibria in a firing game with impartial justice (2009)
Working Paper: Multiple equilibria in a firing game with impartial justice (2008)
Working Paper: Multiple equilibria in a firing game with impartial justice (2008)
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