Should severance pay be consistent for all workers?

J. Ignacio García Pérez

World of Labour, 2015, No 174, 174

Abstract: The trend towards labor market flexibility in Europe has typically involved introducing legislation that makes it easier for firms to issue temporary contracts with low firing costs, while not changing the level of protection that is in place for permanent jobs. This has created a strong “dualism” in some European labor markets, which might affect turnover, wage setting, and human capital accumulation. In view of this, some economists propose replacing the existing system of temporary and permanent contracts by a single open-ended contract for new hires, with severance pay smoothly increasing with tenure on the job.

Keywords: single contract; permanent and temporary contracts; severance pay; dual labor markets (search for similar items in EconPapers)
JEL-codes: J23 J32 J63 J64 J65 J68 (search for similar items in EconPapers)
Date: 2015
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