Layoff Costs and Efficiency with Asymmetric Information

Alain Delacroix and Etienne Wasmer

No 4524, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Wage determination under asymmetric information generates inefficiencies due to excess turnover. Severance pay and layoff taxes can improve efficiency. We show that inefficient separations can even be fully removed with fixed separation taxes in the case where the relevant private information is exponentially distributed.

Keywords: bargaining; asymmetric information; employment protection legislation; inefficient job separations (search for similar items in EconPapers)
JEL-codes: J41 J60 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2009-10
New Economics Papers: this item is included in nep-bec and nep-cta
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Layoff Costs and Efficiency with Asymmetric Information (2009)
Working Paper: Layoff Costs and Efficiency with Asymmetric Information (2009)
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