Arbeitspapier
Labor-market Frictions, Incomplete Insurance and Severance Payments
We analyze the effects of government-mandated severance payments in a rich life-cycle model with search-matching frictions in the labor market, risk-averse agents and imperfect insurance against idiosyncratic shocks. Our model emphasizes a tension between workerfirm wage bargains and consumption smoothing: entry wages respond to expected future severance payments by tilting downwards, which runs counter to having a smooth consumption path. Quantitatively, we find that these wage-shifting effects are sizable enough for severance payments to produce large welfare losses. Our assessment contrasts sharply with previous studies that restricted the extent of worker-firm bargaining to analyze the welfare implications of severance payments.
- Sprache
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Englisch
- Erschienen in
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Series: Document de travail ; No. 2018-30
- Klassifikation
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Wirtschaft
- Ereignis
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Geistige Schöpfung
- (wer)
-
Lalé, Étienne
- Ereignis
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Veröffentlichung
- (wer)
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Université du Québec à Montréal, École des sciences de la gestion (ESG UQAM), Département des sciences économiques
- (wo)
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Montréal
- (wann)
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2018
- Handle
- Letzte Aktualisierung
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20.09.2024, 08:23 MESZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Lalé, Étienne
- Université du Québec à Montréal, École des sciences de la gestion (ESG UQAM), Département des sciences économiques
Entstanden
- 2018