Severance payments in an economy with frictions

• 成果类型: Article
• 署名作者: Alvarez, F; Veracierto, M
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Chicago; University of Chicago; Universidad Torcuato Di Tella; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(01)00058-7
• 发表日期: 2001
• 页码: 477-498
• 关键词: Severance payments; search; unemployment insurance

摘要

We construct a general equilibrium model to evaluate the quantitative effects of severance payments in the presence of contractual and reallocational frictions. Key elements of the model are establishment level dynamics, imperfect insurance markets, and variable search decisions. In contrast to previous studies that analyzed severance payments in frictionless environments, we find that severance payments can have large positive effects on employment and welfare. This result is a consequence of search being costly and of wage contracts being rigid. Moreover, we find that the firing penalty role of severance payments is much more important than their insurance role. (C) 2001 Elsevier Science B.V. All rights reserved.