Do Firms and Workers Bargain During Dismissals?

Pauline Carry and Benjamin Schoefer

No 33245, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Dismissals are costly to both firms and workers. Do they bargain to reduce these costs? We identify negotiation of separation terms by exploiting the introduction of “separations by mutual agreement” (SMA) in France. Compared to dismissals, the SMA eliminates red tape, forecloses litigation, allows bargained severance, reduces stigma, and preserves unemployment insurance eligibility. First, we find that take-up of SMAs during dismissals is only 11%, despite large gains from trade. Second, take-up is zero for dismissals headed for litigation, low in adversarial work environments, and 38% in cooperative dismissals enabling early retirement. Third, surveying HR directors, we identify three barriers to bargaining: hostility, maintaining discipline among the remaining workforce, and asymmetric beliefs about litigation outcomes.

JEL-codes: D9 E24 J0 J38 J50 J63 M5 (search for similar items in EconPapers)
Date: 2024-12
New Economics Papers: this item is included in nep-hrm and nep-lab
Note: EFG LE LS ME PE
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.nber.org/papers/w33245.pdf (application/pdf)

Related works:
Working Paper: Do Firms and Workers Bargain During Dismissals? (2024)
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:nbr:nberwo:33245

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33245

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().