Mandatory layoff notice by length of job tenure in the G7, Australia, New Zealand, Ireland, Scandinavia, Greece and Spain

Mandatory notice periods for layoffs put the very survival of troubled the business at risk. By having to give long periods of notice, a firm experiencing a downturn is less able to adjust quickly and more likely simply to go out of business because it cannot meet its larger payroll.

image

Source: Labor Market Regulation – Doing Business – World Bank Group.

Mandatory severance pay by length of job tenure in the G7, Australia, New Zealand, Ireland, Scandinavia, Greece and Spain

There are a wide differences across the OECD in mandatory severance pay in the event of a layoff.

image

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.

Point of Order

Politics and the economy

New Historical Express

(Formerly Hatful of History)

Economics in the Rear-View Mirror

Archival Artifacts from the History of Economics

CAMERA UK

COMMITTEE FOR ACCURACY IN MIDDLE EAST REPORTING AND ANALYSIS

Truth on the Market

Scholarly commentary on law, economics, and more

Stockerblog

Philosophy, Politics, Culture from Barry Stocker, British philosopher based in Istanbul

Organizations and Markets

Economics of organizations, strategy, entrepreneurship, innovation, and more

John Quiggin

Commentary on Australian and world events from a socialist and democratic viewpoint

The Antiplanner

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Pedestrian Observations

For Walkability and Good Transit, and Against Boondoggles and Pollution

Bet On It

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Trade Diversion

Commentary on development, globalization, and trade by Jonathan Dingel.

Movie Nation

Roger Moore's film criticism, against the grain since 1984.

Conversable Economist

In Hume’s spirit, I will attempt to serve as an ambassador from my world of economics, and help in “finding topics of conversation fit for the entertainment of rational creatures.”

AwayPoint

Between An Island of Certainties and the Unknown Shore

Weapons and Warfare

History and Hardware of Warfare

fportier.wordpress.com/

Franck Portier's professional page

NZCPR Site

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Anti-Dismal

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Bowalley Road

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

History of Sorts

WORLD WAR 2,EIGHTIES,MUSIC,HISTORY,HOLOCAUST

Tudor Chronicles

News, reviews and talk all about the Tudors

Karl du Fresne

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Roger Pielke Jr.

an undisciplined academic - @RogerPielkeJr on Twitter

Great Books Guy

Reading The Classics

@STILLTish. Gender Abolition

Examining Gender Identity ideology and its impact on Women's Sex based rights and Gay Rights. Exploring how this has taken such firm root in Western societies (Cognitive & Regulatory Capture).

200-Proof Liberals

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

What Paul Gregory is Writing About

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Offsetting Behaviour

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

JONATHAN TURLEY

Res ipsa loquitur - The thing itself speaks

Conversable Economist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Barrie Saunders

Thoughts on public policy and the media

The Victorian Commons

Researching the House of Commons, 1832-1868

Coyote Blog

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

The History of Parliament

Blogging on parliament, politics and people, from the History of Parliament

Books & Boots

reflections on books and art

Legal History Miscellany

Posts on the History of Law, Crime, and Justice

Sex, Drugs and Economics

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Climatism

Tracking Anthropogenic Climate Alarmism

FREEcology

Libertarian environmentalism

Doc's Books

A window into Doc Freiberger's library

%d bloggers like this: