search query: @indexterm Unemployment insurance / total: 60
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| Author: | Nosal, E. |
| Title: | Incomplete insurance contracts and seniority layoff rules. |
| Journal: | Economica
1990 : NOV, VOL. 57:228, p. 423-438 |
| Index terms: | PAY EMPLOYMENT CONTRACTS UNEMPLOYMENT INSURANCE WORKERS |
| Language: | eng |
| Abstract: | Many firms adopt layoff and wage policies that are independent of worker productivity and depend solely upon the length of time that a worker has been employed by the firm. In the paper a new explanation of this phenomenon is explored. It is based on the fact that workers are unable fully to insure variations in their incomes over their lifetimes. By appropriately designing a labour contract, a worker and his firm can overcome some of the deadweight costs associated with worker being excluded from insurance market. If the conditions are not particularly restrictive, the preferred labour contract is one that is characterized by a "last hired, first fired" layoff rule with an increasing wage profile over a worker's lifetime. |
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