Boeri, Tito; Garibaldi, Pietro; Moen, Espen R - C.E.P.R. Discussion Papers - 2014
All OECD countries have either legally mandated severance pay or compensations imposed by industry-level bargaining in … market risk. In this paper we show that mandatory severance is optimal in presence of wage deferrals motivated by deterrence … establish a link between optimal severance and efficiency of the legal system and we characterize the effects of shifting the …