Type
Working paper
Title
Layoff Costs and Efficiency with Asymmetric Information
Author(s)
DELACROIX Alain - Centre interuniversitaire de recherche sur les politiques économiques et l'emploi (CIRPEE) (Author)
WASMER Etienne - Département d'économie (Author)
Abstract
EN
Wage determination under asymmetric information generates ine¢ ciencies due to excess turnover. Severance pay and layo¤ taxes can improve e¢ ciency. We show that inefficient separations can even be fully removed with …xed separation taxes in the case where therelevant private information is exponentially distributed.

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