dc.contributor.author |
Karabay, Bilgehan |
en |
dc.contributor.author |
McLaren, J |
en |
dc.date.accessioned |
2011-10-25T01:56:03Z |
en |
dc.date.issued |
2011-12 |
en |
dc.identifier.citation |
European Economic Review 55(8):1083-1093 Dec 2011 |
en |
dc.identifier.issn |
0014-2921 |
en |
dc.identifier.uri |
http://hdl.handle.net/2292/8427 |
en |
dc.description.abstract |
We examine self-enforcing contracts between risk-averse workers and risk-neutral firms (the ‘invisible handshake’) in a labor market with search frictions. Employers promise as much wage-smoothing as they can, consistent with incentive conditions that ensure they will not renege during low-profitability times. Equilibrium is inefficient if these incentive constraints bind, with risky wages for workers and a risk premium that employers must pay. Mandatory firing costs can help, by making it easier for employers to promise credibly not to cut wages in low-profitability periods. We show that firing costs are more likely to be Pareto-improving if they are not severance payments. |
en |
dc.language |
English |
en |
dc.publisher |
Elsevier |
en |
dc.relation.ispartofseries |
European Economic Review |
en |
dc.rights |
Items in ResearchSpace are protected by copyright, with all rights reserved, unless otherwise indicated. Previously published items are made available in accordance with the copyright policy of the publisher. Details obtained from: http://www.sherpa.ac.uk/romeo/issn/0014-2921/ |
en |
dc.rights.uri |
https://researchspace.auckland.ac.nz/docs/uoa-docs/rights.htm |
en |
dc.title |
Pareto-Improving Firing Costs? |
en |
dc.type |
Journal Article |
en |
dc.identifier.doi |
10.1016/j.euroecorev.2011.04.008 |
en |
pubs.issue |
8 |
en |
pubs.begin-page |
1083 |
en |
pubs.volume |
55 |
en |
dc.rights.holder |
Copyright: Elsevier |
en |
pubs.author-url |
http://www.sciencedirect.com/science/article/pii/S0014292111000481 |
en |
pubs.end-page |
1093 |
en |
pubs.publication-status |
Published |
en |
dc.rights.accessrights |
http://purl.org/eprint/accessRights/RestrictedAccess |
en |
pubs.subtype |
Article |
en |
pubs.elements-id |
233881 |
en |
pubs.record-created-at-source-date |
2011-10-19 |
en |