Severance pay and the accuracy of judgment

We show that the severance pay scheme can serve as bond and improve the welfare. When the authority appropriately adjudges the worker's effort, the increase in a severance payment reduces the shirker''s expected benefit, so that the severance pay works as a bond, which is warranted by the authority.

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Year of publication:	2006-02-02
Authors:	Azetsu, Kenji ; Kumagai, Taro
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 10.2006, 1, p. 1-7
Publisher:	AccessEcon

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Extent:	application/pdf
Type of publication:	Article
Classification:	J4 - Particular Labor Markets ; J6 - Mobility, Unemployment, and Vacancies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010630147