Job displacement risk and severance pay

• 成果类型: Article
• 署名作者: Cozzi, Marco; Fella, Giulio
• 署名单位: University of Victoria; University of London; Queen Mary University London; University of London; London School Economics & Political Science
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2016.11.001
• 发表日期: 2016
• 页码: 166-181
• 关键词: Severance payments; incomplete markets; welfare

摘要

This paper is a quantitative, equilibrium study of the insurance role of severance pay when workers face displacement risk and markets are incomplete. A key feature of our model is that, in line with an established empirical literature, job displacement entails a persistent fall in earnings upon re-employment due to the loss of tenure. The model is solved numerically and calibrated to the US economy. In contrast to previous studies that have analyzed severance payments in the absence of persistent earning losses, we find that the welfare gains from the insurance against job displacement afforded by severance pay are sizable. (C) 2016 Elsevier B.V. All rights reserved.