search query: @indexterm severance payments / total: 11
reference: 4 / 11
| Author: | Burguet, R. Caminal, R. Matutes, C. |
| Title: | Golden cages for showy birds: optimal switching costs in labor contracts |
| Journal: | European Economic Review
2002 : AUG, VOL. 46:7, p. 1153-1185 |
| Index terms: | CONTRACTS LABOUR SEVERANCE PAYMENTS SWITCHING COSTS |
| Language: | eng |
| Abstract: | Under what circumstances do workers sign contracts with high quitting penalties? The authors' answer points to market transparency. When the worker's performance is privately observed by the incumbent firm, alternative employers face an adverse selection problem. As a result, efficient separations can only take place through involuntary layoffs and there is no role for quitting fees. In contrast, when performance is public, quitting fees are useful devices to appropriate the surplus from workers' reallocation. |
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