The Response of Employees to Severance Incentives: The University of California's Faculty, 1991-94

John Pencavel

Journal of Human Resources, 2001, vol. 36, issue 1, 58-84

Abstract: In response to huge budgetary shortfalls in the early 1990s, the University of California offered its older and longer-service employees financial inducements to leave. This paper analyzes the responses of UC's faculty to three waves of buyout incentives. It is estimated that an individual presented with 10 percent higher severance benefits has a 7-8 percent higher probability of quitting. However, quit probabilities are very difficult to forecast with accuracy. This casts doubt on arguments that maintain that buyouts are superior to employer-initiated layoffs as a mechanism to effect large employment changes.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:36:y:2001:i:1:p:58-84

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