Just-cause provisions, severance pay, and the efficiency wage hypothesis

Harvey James and Derek M. Johnson
Additional contact information
Derek M. Johnson: Department of Economics, University of Connecticut, U-63 Storrs, CT, USA, Postal: Department of Economics, University of Connecticut, U-63 Storrs, CT, USA

Managerial and Decision Economics, 2000, vol. 21, issue 2, 83-88

Abstract: A simple model of employment contracting is employed to examine the effectiveness of just-cause provisions in alleviating employer opportunism in two types of efficiency wage contracts-standard contracts, in which wages exceed the worker's marginal contribution, and deferred wages, which are paid after a period of tenure in the firm. It is argued that just-cause employment policies are necessary and sufficient to prevent employer opportunism when standard efficiency wages are utilized. However, just-cause policies are not sufficient to deter employer opportunism when employment contracts are of the delayed-payment type. In these contracts, other contractual provisions, such as severance provisions, are also necessary. Copyright © 2000 John Wiley & Sons, Ltd.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:21:y:2000:i:2:p:83-88

DOI: 10.1002/1099-1468(200003)21:2<83::AID-MDE970>3.0.CO;2-X

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().