Statutory firing costs and lay-offs in Canada |
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Institution: | 1. Department of Finance, College of Commerce, National Chengchi University, Taipei, Taiwan;2. Department of Finance, College of Business, National Taipei University of Business, Taipei, Taiwan;3. Department of Finance, College of Management, National Taiwan University, Taipei, Taiwan |
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Abstract: | Firing costs may deter firms from engaging in both lay-offs and temporary hiring. While the net response of average employment to firing costs is ambiguous, lay-offs will be reduced through both channels and their frequency therefore will unambiguously decline. This paper estimates the effect of Canadian advance notice and severance laws on individual permanent lay-off hazards. Individual notice laws are found to reduce the lay-off hazard, particularly among non-professional, non-union workers, but the effect is small. Neither group notice nor severance laws are statistically significant. These laws do not appear to substantially affect adjustment in the Canadian labour market. |
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