Severance Pay Programs around the World: History, Rationale, Status, and Reforms

Robert Holzmann, Yann Pouget, Milan Vodopivec and Michael Weber
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Yann Pouget: World Bank

No 5731, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper examines severance pay programs around the world by providing the first ever overview of existing programs, examining their historic development, assessing their economic rationale and describing current reform attempts. While a significant part of the paper is devoted to a comprehensive 183 cross country review of existing severance arrangements and their characteristics, the paper goes beyond a mere description. It develops and empirically tests three hypotheses about the economic rationale of the program, namely severance pay being: (i) a primitive income protection program, (ii) an efficiency enhancing human resource instrument, and (iii) a job protection instrument. The paper also reviews the recent reforms of Austria, Chile, Italy and Korea.

Keywords: severance pay; termination benefit; end-of-service benefit; termination benefits; seniority pay; indemnities; leaving allowances (search for similar items in EconPapers)
JEL-codes: J33 J65 K31 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2011-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Published - published in: Robert Holzmann and Milan Vodopivec (eds), Reforming Severance Pay: An International Perspective,Washington, D.C.: The World Bank., 2012

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Working Paper: Severance pay programs around the world: history, rationale, status, and reforms (2011)
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