In 1996 Austria introduced a tax for the layoff of older workers, which was tightened in 2000. The regulation requires employers to pay a tax of up to 170% of the gross monthly income when they give notice to employees aged 50 or more. We use data from Austrian social security records to...

Decomposing wages into worker and firm wage components, we find that firm-fixed components are sizeable parts of workers' wages. If workers can only imperfectly observe the extent of firm-fixed components in their wages, they might be misled about the overall wage distribution. Such...