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This paper develops a simple model to analyze the impact of tenure-based severance payments on firms' hiring and firing decisions. The findings are that under certain conditions, this feature leads to a Last-in First-out firing policy. Also, reforms that increase the slope of the severance-tenure profile tend to increase the probabilities of dismissal of low tenure workers.
Unemployment is a pressing problem in many countries in Latin America. Financial crises and increased globalization increase job turnover and therefore the risk of unemployment. To protect workers, Chile implemented an innovative unemployment insurance (UI) system. UI protects workers but creates moral hazard and self-selection issues. Using administrative data for the period 2007 to 2010, the eff ... (View publication)
The Research Department is pleased to present the latest edition of its newsletter, Ideas for Development in the Americas (IDEA). This issue is based on the IDB's 2004 report on Economic and Social Progress in Latin America, which focuses on the problems surrounding people and their jobs. The report presents an anatomy of Latin American labor markets, a diagnosis of their ills, and prescriptions f ... (View publication)
This paper takes advantage of several reforms that provide time and cross sectional variation to identify the effects of unemployment insurance and severance payments on the duration of unemployment and on the separation probability in Argentina. Administrative data permits analysis of the duration of unemployment of covered spells with detailed information about transfers and their duration, whil ... (View publication)
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