Inside severance pay

Boeri, Tito; Garibaldi, Pietro; Moen, Espen R.

doi:10.1016/j.jpubeco.2016.11.003

Cited by 22 publications

(26 citation statements)

References 48 publications

(81 reference statements)

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“…As of March 2015, Italy introduced a new labor contract for all new open ended jobs based on graded security, with severance payments steadily increasing with tenure. This design of the contract had been advocated within policy-oriented academic circles (Boeri and Garibaldi, 2008;Cahuc et al 2012; Bentolila and Jimeno, 2008) as well as by the research community (Blanchard and Tirole, 2008;Boeri, Garibaldi and Moen, 2017). The reform introduced a discrete change to the legislation as the traditional reinstatement clause applied to firms with more than 15 employees in the case of unfair dismissals was suppressed for all new hires on a open ended basis.…”

Section: Introductionmentioning

confidence: 99%

A tale of comprehensive labor market reforms: Evidence from the Italian jobs act

Boeri

Garibaldi

2019

Labour Economics

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The Italian Jobs Act introduced a subsidy for new hirings as well as a new open ended labor contract based on graded security, with severance payments increasing with tenure, while phasing out the compulsory reinstatement of workers in the case of unfair dismissals applied until March 2015. Simple models of job creation and destruction predict that hiring subsidies and lower _ring costs unambiguously increase hirings. Moreover, lower _ring costs associated with graded security should also increase layoffs. These effects need not to be uniform across the size distribution of firms, especially when firms of different size are treated differently by the policy changes as in the case of the Jobs Act. On the one hand, the hiring subsidy was proportional to wages, but had a cap, hence was more generous for small firms -typically paying lower wages than large firmsmaking them particularly responsive along the job creation margin. On the other hand, the reduction in _ring costs applied mainly to large firms concentrating on them the adjustment along the job destruction margin. To investigate empirically the effects of the Italian Jobs Act, we draw on a unique dataset covering the universe of private firms in Italy having at least once 10 to 20 employees in the two years prior to the reform of January 2015. We find evidence of a substantial increase in open ended hirings, and in the transformation of fixed-term into open ended contracts, in the aftermath of the Jobs Act. The effects of the Jobs Act on firings-converselyare much smaller, and are concentrated on large _firms, while small _firms react more intensively-creating new open ended contracts -to the hiring subsidy.

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Section: Introductionmentioning

confidence: 99%

A tale of comprehensive labor market reforms: Evidence from the Italian jobs act

Boeri

Garibaldi

2019

Labour Economics

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“…Government-mandated programs Boeri, Garibaldi, and Moen (2017) compile information on judicial discretion over severance payments in OECD countries. Table 1 of their study indicates that the cost of a fair economic dismissal for a worker with 20 years of job tenure amount to 10 1 months of wages.…”

Section: Economy-specific Parametersmentioning

confidence: 99%

“…Other technology parameters For matching efficiency (M) and the standard deviation of productivity shocks (σ), we set up the following targets for the LF economy: (i) the unemployment rate among prime-age workers is 5 5 percent, and (ii) their monthly separation rate during employment (i.e., transitions out of employment) is 2 5 percent. Note 25 Boeri, Garibaldi, and Moen (2017) report that the costs of a fair economic dismissal for a high-tenure worker amount to 7 4 months of wages in France, 17 months in Germany, and 6 0 months in Italy. We refer to the average of these three numbers.…”

Section: Economy-specific Parametersmentioning

confidence: 99%

Turbulence and the employment experience of older workers

Lalé

2018

Quantitative Economics

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This paper provides new interpretations of the effects of rising economic turbulence—an increase in the rate of skill depreciation upon job loss—and its interaction with labor market institutions. We have three main results, based on a life‐cycle model with labor market frictions and labor force participation decisions. First, rising economic turbulence during the 1970s and 1980s accounts for the decline in employment among older workers in the United States. Second, the interaction between turbulence and institutions explains most of the reduction in labor force participation among older workers in Europe over this period, but ultimately explains little of the rise in unemployment. Third, only a small share of the increase in unemployment can be attributed to the early retirement policies that were implemented in Europe from the 1970s up until the early 1990s. Our analysis indicates that incorporating an operative labor supply choice can pose serious challenges to theories aiming to explain the European unemployment problem.

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“…There are 21 items for each country summarizing severance pay, notice periods, rules for fair/unfair and for personal/collective dismissals, etc. ; these items become inputs in the design of the well-known EPL categorical indicators which have been widely used in the literature (see, e.g., Boeri et al 2017, for an overview). In particular, we choose item 7 where OECD provides a representative/average calculation in terms of monthly wages of "compensation following unfair dismissal of a worker under a permanent contracts with 20 years of tenure".…”

Section: Epl Gapsmentioning

confidence: 99%

Dual employment protection and (lack of) on-the-job training: PIAAC evidence for Spain and other European countries

Cabrales

Dolado

Mora

2017

SERIEs

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Using micro data from the Programme for the International Assessment of Adult Competencies (PIAAC), we first document how having a temporary contract in Spain is associated to lower levels of on-the-job training (OJT). Next, we find that this OJT gap is positively correlated with gaps in the literacy and numeracy scores achieved by these two types of workers in the PIAAC study. Although we choose Spain as a case study of a dual labor market, we also provide cross-country evidence showing that OJT gaps are lower in those European labor markets where dualism is less entrenched than in those where it is more extended.Keywords Dual labor market · On-the-job training · Cognitive skills · Severance payWe are grateful to the Editor (Nezih Guner), two anonymous referees, Andrea Bassanini, Roman Fossati, Andrea Ichino, Greg Jolivet, Stepan Jurajda and Helene Turon, as well as participants in the CAGE conference on "Education, Human Capital and Labor Market Outcomes" (Venice), ESSLE 2014 (Ammersee) and seminars at Bristol, IMT-Lucca and Padua for useful comments and suggestions that improved the paper. We also wish to thank Nicolas Escribano for excellent research assistance.

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Inside severance pay

Cited by 22 publications

References 48 publications

A tale of comprehensive labor market reforms: Evidence from the Italian jobs act

A tale of comprehensive labor market reforms: Evidence from the Italian jobs act

Turbulence and the employment experience of older workers

Dual employment protection and (lack of) on-the-job training: PIAAC evidence for Spain and other European countries

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