Understanding the Determination of Severance Pay: Mandates, Bargaining, and Unions
Stéphane Auray,
Samuel Danthine and
Markus Poschke ()
Sciences Po publications from Sciences Po
Abstract:
Asubstantial share of severance payments derives from private contracts or collective agreements. In this paper, we study the determination of these payments. We analyze joint bargaining over wages and severance payments in a search-and-matching model with risk-averse workers. Individual bargaining results in levels of severance pay that provide full insurance, but also depend on unemployment benefits and job-finding rates. Unions also choose full insurance. Because their higher wage demands reduce job creation, this requires higher severance pay. Severance pay observed in eight European countries, to which we calibrate the model, lies between predictions from the bargaining and union scenarios.
Keywords: Bargaining; Severance pay; Unemployment insurance; Unions (search for similar items in EconPapers)
JEL-codes: E24 J32 J33 J64 J65 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-dge, nep-eur, nep-hrm, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Published in The Scandinavian journal of economics, 2020, vol. 122, pp.1073-1111
Downloads: (external link)
https://spire.sciencespo.fr/hdl:/2441/65dh65gjnn96 ... of-severance-pay.pdf (application/pdf)
Related works:
Journal Article: Understanding the Determination of Severance Pay: Mandates, Bargaining, and Unions (2020) 
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:spo:wpmain:info:hdl:2441/65dh65gjnn96rqgo52mg09a1uu
Access Statistics for this paper
More papers in Sciences Po publications from Sciences Po Contact information at EDIRC.
Bibliographic data for series maintained by Spire @ Sciences Po Library ().