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
Authors:	Delacroix, Alain ; Wasmer, Etienne
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Lohnverhandlungen \| Asymmetrische Information \| Arbeitsmobilität \| Allokationseffizienz \| Arbeitnehmerschutz \| Abfindung \| Kündigungsschutz \| Theorie \| Bargaining \| asymmetric information \| employment protection legislation \| inefficient job separations

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Series:	IZA Discussion Papers ; 4524
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	614609720 [GVK] hdl:10419/36048 [Handle]
Classification:	J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets ; J60 - Mobility, Unemployment, and Vacancies. General
Source:	EconStor

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