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Kenji Azetsu and Taro Kumagai
''Severance pay and the accuracy of judgment''
( 2006, Vol. 10 No.1 )
We show that the severance pay scheme can serve as bond and improve the welfare. When the authority appropriately adjudges the worker's effort, the increase in a severance payment reduces the shirker''s expected benefit, so that the severance pay works as a bond, which is warranted by the authority.
JEL: J4 - Particular Labor Markets: General
J6 - Mobility, Unemployment, and Vacancies: General
Manuscript Received : Jan 19 2006 Manuscript Accepted : Feb 02 2006

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