Layoff Costs and Efficiency with Asymmetric Information

Wage determination under asymmetric information generates inefficiencies due to excess turnover. Severance pay and layoff taxes can improve efficiency. We show that inefficient separations can even be fully removed with fixed separation taxes in the case where the relevant private information is exponentially distributed.

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Year of publication:	2009-10
Authors:	Delacroix, Alain ; Wasmer, Etienne
Institutions:	Institute for the Study of Labor (IZA)
Subject:	bargaining \| asymmetric information \| employment protection legislation \| inefficient job separations

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Extent:	application/pdf
Series:	IZA Discussion Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 4524 12 pages
Classification:	J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets ; J60 - Mobility, Unemployment, and Vacancies. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008527311