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Peter FREDRIKSSON ( Uppsala University ) – "Consequences of advance layoff notice for workers and firms"

May 14, 2019 @ 12:15 pm - 1:30 pm
The Microeconometrics Seminar: Every Tuesday at 12:15 pm.
Time: 12:15 pm – 1:30 pm
Date: 14 th of May 2019
Place: Room 3001
Peter FREDRIKSSON ( Uppsala University ) – “Consequences of advance layoff notice for workers and firms

Abstract: Employment protection rules are often critized for creating inefficiently low labor turnover. However, such rules also provide insurance for displaced workers. This paper addresses the benefits and costs of advance notice of job loss for workers and firms, respectively, from an empirical and a theoretical perspective. Empirically, we use unique administrative data from Sweden on the exact dates of layoff notification as well as contracted notice periods, ail at the individual-level. Discontinuities in notification time generated by employment legislation or collective bargaining agreements provide exogenous variation. Our regression-discontinuity estimates indicate that longer notice periods reduce the probability of non-employment and increase annual earnings during the first year after layoff notification. There is some evidence indicating that workers who get longer notification periods experience smaller falls in their reemployment wages. We also show that firms are willing to make – and workers accept – an upfront severance payment in order to avoid the notice period and that firms respond to longer notification periods by laying off fewer workers.


Laurent DAVEZIES (Laboratoire de Microéconométrie-CREST)
Benoît SCHMUTZ (Laboratoire de Microéconométrie-CREST)
Arne UHLENDORFF (Laboratoire de Microéconométrie-CREST)