Goerke, Laszlo - Institute for the Study of Labor (IZA) - 2006
In an efficiency wage economy, lump-sum severance pay from which shirkers can be excluded raises employment. However … employment effects if effort can be varied continuously. A substitution of the earnings-related for the lumpsum component reduces … employment. Thus, the prevalent form of severance payments in OECD countries might have less advantageous employment effects than …