Fella, Giulio - Society for Economic Dynamics - SED - 2004
contracts featuring productivity-independent wages and severance pay. Contracts can be renegotiated ex post by mutual consent …. Laissez-faire contracts are never renegotiated and fully insure workers. Positive severance payments are part of an optimal … contract whenever employed workers enjoy positive rents over their unemployed counterparts. The optimal severance payment size …