What Have We Learned About the Employment Effects of Severance Pay? Further Iterations of Lazear et al

John Addison and Paulino Teixeira

No 943, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this study we examine the contribution of severance pay to employment and unemployment development using data on industrialized OECD countries. Our starting point is Lazear’s (1990) empirical dictum that severance payment requirements adversely impact the labor market. We extend his sample period and add to his parsimonious specification a variety of fixed and time-varying labor market institutions. While the positive effect of severance pay on unemployment garners some support, there is no real indication of adverse effects for (the three) other employment outcomes identified here. Moreover, with the possible exception of collective bargaining coordination, the role of institutions is also more muted than suggested in the literature.

Keywords: time-varying labor market institutions; employment protection; employment; labor force participation; unemployment; severance pay; long-term unemployment (search for similar items in EconPapers)
JEL-codes: E24 J23 J64 J65 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2003-11
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (4)

Published - published in: Empirica, 2005, 32 (3-4), 345-368

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Journal Article: What Have We Learned about the Employment Effects of Severance Pay? Further Iterations of Lazear Et al (2005)
Working Paper: What Have We Learned About The Employment Effects of Severance Pay? Further Iterations of Lazear et al (2004)
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