Source: Unmitigated Gauls (1998).
Mandatory severance pay by length of job tenure in the G7, Australia, New Zealand, Ireland, Scandinavia, Greece and Spain
11 Feb 2016 Leave a comment
in human capital, job search and matching, labour economics, labour supply, law and economics, managerial economics, organisational economics, personnel economics, property rights, unemployment Tags: employment law, employment protection laws, employment regulation, firm-specific human capital, job search, labour market regulation, severance pay
There are a wide differences across the OECD in mandatory severance pay in the event of a layoff.
Source: Labor Market Regulation – Doing Business – World Bank Group.
Severance pay makes it more expensive to fire and therefore more expensive to hire. This means fewer job vacancies will be created but they will last longer.
The presence of mandatory severance pay could increase or reduce the unemployment rate but unemployment durations will increase because it takes longer to find a suitable job match among the fewer available vacancies.
Mandating severance pay does not make the job match inherently more profitable. It just redistributes some of the surplus from the job match to the end when it is terminated.
Employers and jobseekers may agree to severance pay where investments in firm specific and job specific human capital for the job is profitable.
Severance pay in these circumstances gives the employer and more reasons to invest in specific human capital. The promise to pay severance pay will make the employer hesitate to lay them off. The employer will instead retain them over a slack period or redeploy them within the company rather than pay them out. This pre-commitment encourages investment in firm specific and job specific human capital by both sides more secure, which makes the job match more profitable overall for both sides.
Of course, if it was possible to negotiate completely around severance pay mandated by law, there would be no effects on hiring, firing and unemployment durations. All it would mean is take-home pay would be less but in the event of a layoff, these employees would get that this wage reduction back as a lump sum.
Danish, NZ, UK & US statutory protections against layoffs @grantrobertson1@nzlabour
18 Jan 2016 Leave a comment
in job search and matching, labour economics, politics - New Zealand, politics - USA Tags: Denmark, employment law, employment protection, labour market regulation
[Tweet https://twitter.com/KiwiLiveNews/status/688503382181449728 ]
Denmark is all the go in the New Zealand Labour Party as a model for labour market flexibility despite the fact that it is much more heavily regulated than either New Zealand or the USA.
Eurosclerosis illustrated in the labour market
13 Nov 2015 Leave a comment
in economic history, Euro crisis, labour economics, labour supply, macroeconomics, politics - USA, public economics Tags: employment law, Eurosclerosis, France, Germany, growth of government, labour market regulation, size of government, taxation and labour supply
Source: Linda Regber.
@DavidLeyonhjelm on deregulating the Australian labour market
17 Sep 2015 1 Comment
in applied price theory, economic history, economics of regulation, industrial organisation, job search and matching, labour economics, minimum wage, survivor principle, unions Tags: Australia, employment law, employment protection law, federalism, labour market deregulation, labour market regulation, union power, unions
Incidence of long-term unemployment in the PIGS since 1983
17 Aug 2015 Leave a comment
in business cycles, currency unions, economic growth, economic history, Euro crisis, job search and matching, labour economics, labour supply, macroeconomics, occupational choice, unemployment, unions, welfare reform Tags: employment law, equilibrium unemployment, Greece, Italy, labour market regulation, natural unemployment rate, Portugal, Spain, unemployment duration
The boom that preceded the bust in the Greek economy did nothing for the rate of long-term unemployment among Greeks. Long-term unemployment had been pretty stable prior to the economic boom after joining the euro currency union.
Source: OECD StatExtract.
Nothing much happened to long-term unemployment in Italy or Portugal in recent decades. Spanish long-term unemployment fell in line with the economic boom in Spain over the 1980s and 1990s up until the global financial crisis.
Italian unemployment incidence by duration since 1983
12 Aug 2015 Leave a comment
in business cycles, economic history, Euro crisis, job search and matching, labour economics, macroeconomics, unemployment Tags: employment law, equilibrium unemployment rate, Eurosclerosis, Italy, labour market regulation, natural unemployment rate, unemployment duration
Unemployment of more than a year was slowly tapering down in Italy before the global financial crisis, but ever so slowly.
Source: OECD StatExtract.
Unemployment rates and the minimum wage in the European Union
08 Aug 2015 Leave a comment
in Euro crisis, job search and matching, labour economics, macroeconomics, minimum wage, unemployment Tags: employment law, equilibrium unemployment rates, Eurosclerosis, expressive voting, labour market regulation, natural unemployment rate, offsetting behaviour, rational irrationality, unintended consequences
French unemployment incidence by duration since 1983
05 Aug 2015 Leave a comment
in economic history, Euro crisis, job search and matching, labour economics, labour supply, macroeconomics, unemployment Tags: employment law, equilibrium unemployment rate, France, labour market regulation, natural unemployment rate, unemployment duration
Nothing really changes in France recently unemployment duration. Italian labour market is notorious for having very low inflows and outflows from employment and unemployment.
Source: OECD StatExtract.
Unemployment rates across the OECD member countries
30 Jul 2015 Leave a comment
in business cycles, currency unions, economic growth, Euro crisis, job search and matching, labour economics, labour supply, macroeconomics, unemployment Tags: employment law, employment regulation, EU, Euro sclerosis, Euroland, Eurosclerosis, Japan, labour market regulation
Who gains and who loses from employment protection laws over the business cycle?
13 Mar 2015 Leave a comment
in business cycles, economics of regulation, Euro crisis, job search and matching, labour economics, law and economics, macroeconomics, unemployment Tags: employment protection laws, Euroland, Eurosclerosis, labour market regulation
77% more long-term unemployed people than before the crisis – We need them back in work! bit.ly/1JTTzYm #Jobs http://t.co/EFRGclFVms—
OECD Social (@OECD_Social) July 10, 2015
HT: IMF
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