Mandatory Severance Pay : Its Coverage and Effects in Peru
In Peru, as in many other developing countries, employers have the legal obligation to compensate workers who are dismissed through no fault of their own. Is this an efficient mechanism for providing income support to the unemployed? The authors se...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2001/06/1490131/mandatory-severance-pay-coverage-effects-peru http://hdl.handle.net/10986/19598 |
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okr-10986-195982021-04-23T14:03:43Z Mandatory Severance Pay : Its Coverage and Effects in Peru MacIsaac, Donna Rama, Martin COMPENSATION PACKAGES CROSS-COUNTRY DATA CROSS-SECTIONAL DATA DEVELOPING COUNTRIES EARNINGS ECONOMIC PERFORMANCE EMPIRICAL ANALYSIS ENDOGENOUS VARIABLE ENTITLEMENT EXPENDITURES EXPLANATORY VARIABLES FAMILIES FAMILY WORKERS HOUSEHOLD MEMBERS HOUSING INCOME INCOME SECURITY INCOME SOURCES INCOME SUPPORT JOB CREATION JOB SECURITY JOB SEPARATION LABOR COSTS LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MARKET POLICIES MARKET DISTORTIONS MEASUREMENT ERROR MEASUREMENT PROBLEMS MEDIAN VOTER MIDDLE CLASS NEGATIVE IMPACT OBSERVED CHANGES PER CAPITA CONSUMPTION POLICY CHANGE POLICY RESEARCH PRIVATE SECTOR PRODUCTIVITY PUBLIC SECTOR RANDOM EFFECTS RESOURCE ALLOCATION RETIREMENT RETIREMENT AGE SAVINGS SECTOR EMPLOYMENT SEVERANCE SEVERANCE PAY SIGNIFICANCE LEVEL SIGNIFICANT IMPACT SOCIAL SECURITY SOCIAL SECURITY BENEFITS UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNEMPLOYMENT RATE WAGE COSTS WAGE EARNERS WAGES WELFARE FUNCTION WORKERS WORKPLACE In Peru, as in many other developing countries, employers have the legal obligation to compensate workers who are dismissed through no fault of their own. Is this an efficient mechanism for providing income support to the unemployed? The authors seek an answer to this question, using individual records from a household survey with a panel structure. Relying on five coverage indicators, they show that roughly one in five workers in the private sector, and one in three wage earners in the private sector, is legally entitled to severance pay. Coverage is more prevalent among wealthier workers. Results based on several empirical strategies suggest that workers "pay" for their entitlement to severance pay through lower wages. Consumption among unemployed workers who receive severance pay is 20 to 30 percent greater than among those who do not. Consumption among these workers is actually higher than consumption among employed workers, suggesting that mandatory severance pay is overgenerous in Peru. 2014-08-21T19:58:29Z 2014-08-21T19:58:29Z 2001-06 http://documents.worldbank.org/curated/en/2001/06/1490131/mandatory-severance-pay-coverage-effects-peru http://hdl.handle.net/10986/19598 English en_US Policy Research Working Paper;No. 2626 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Peru |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
COMPENSATION PACKAGES CROSS-COUNTRY DATA CROSS-SECTIONAL DATA DEVELOPING COUNTRIES EARNINGS ECONOMIC PERFORMANCE EMPIRICAL ANALYSIS ENDOGENOUS VARIABLE ENTITLEMENT EXPENDITURES EXPLANATORY VARIABLES FAMILIES FAMILY WORKERS HOUSEHOLD MEMBERS HOUSING INCOME INCOME SECURITY INCOME SOURCES INCOME SUPPORT JOB CREATION JOB SECURITY JOB SEPARATION LABOR COSTS LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MARKET POLICIES MARKET DISTORTIONS MEASUREMENT ERROR MEASUREMENT PROBLEMS MEDIAN VOTER MIDDLE CLASS NEGATIVE IMPACT OBSERVED CHANGES PER CAPITA CONSUMPTION POLICY CHANGE POLICY RESEARCH PRIVATE SECTOR PRODUCTIVITY PUBLIC SECTOR RANDOM EFFECTS RESOURCE ALLOCATION RETIREMENT RETIREMENT AGE SAVINGS SECTOR EMPLOYMENT SEVERANCE SEVERANCE PAY SIGNIFICANCE LEVEL SIGNIFICANT IMPACT SOCIAL SECURITY SOCIAL SECURITY BENEFITS UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNEMPLOYMENT RATE WAGE COSTS WAGE EARNERS WAGES WELFARE FUNCTION WORKERS WORKPLACE |
| spellingShingle |
COMPENSATION PACKAGES CROSS-COUNTRY DATA CROSS-SECTIONAL DATA DEVELOPING COUNTRIES EARNINGS ECONOMIC PERFORMANCE EMPIRICAL ANALYSIS ENDOGENOUS VARIABLE ENTITLEMENT EXPENDITURES EXPLANATORY VARIABLES FAMILIES FAMILY WORKERS HOUSEHOLD MEMBERS HOUSING INCOME INCOME SECURITY INCOME SOURCES INCOME SUPPORT JOB CREATION JOB SECURITY JOB SEPARATION LABOR COSTS LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MARKET POLICIES MARKET DISTORTIONS MEASUREMENT ERROR MEASUREMENT PROBLEMS MEDIAN VOTER MIDDLE CLASS NEGATIVE IMPACT OBSERVED CHANGES PER CAPITA CONSUMPTION POLICY CHANGE POLICY RESEARCH PRIVATE SECTOR PRODUCTIVITY PUBLIC SECTOR RANDOM EFFECTS RESOURCE ALLOCATION RETIREMENT RETIREMENT AGE SAVINGS SECTOR EMPLOYMENT SEVERANCE SEVERANCE PAY SIGNIFICANCE LEVEL SIGNIFICANT IMPACT SOCIAL SECURITY SOCIAL SECURITY BENEFITS UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNEMPLOYMENT RATE WAGE COSTS WAGE EARNERS WAGES WELFARE FUNCTION WORKERS WORKPLACE MacIsaac, Donna Rama, Martin Mandatory Severance Pay : Its Coverage and Effects in Peru |
| geographic_facet |
Latin America & Caribbean Peru |
| relation |
Policy Research Working Paper;No. 2626 |
| description |
In Peru, as in many other developing
countries, employers have the legal obligation to compensate
workers who are dismissed through no fault of their own. Is
this an efficient mechanism for providing income support to
the unemployed? The authors seek an answer to this question,
using individual records from a household survey with a
panel structure. Relying on five coverage indicators, they
show that roughly one in five workers in the private sector,
and one in three wage earners in the private sector, is
legally entitled to severance pay. Coverage is more
prevalent among wealthier workers. Results based on several
empirical strategies suggest that workers "pay"
for their entitlement to severance pay through lower wages.
Consumption among unemployed workers who receive severance
pay is 20 to 30 percent greater than among those who do not.
Consumption among these workers is actually higher than
consumption among employed workers, suggesting that
mandatory severance pay is overgenerous in Peru. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
MacIsaac, Donna Rama, Martin |
| author_facet |
MacIsaac, Donna Rama, Martin |
| author_sort |
MacIsaac, Donna |
| title |
Mandatory Severance Pay : Its Coverage and Effects in Peru |
| title_short |
Mandatory Severance Pay : Its Coverage and Effects in Peru |
| title_full |
Mandatory Severance Pay : Its Coverage and Effects in Peru |
| title_fullStr |
Mandatory Severance Pay : Its Coverage and Effects in Peru |
| title_full_unstemmed |
Mandatory Severance Pay : Its Coverage and Effects in Peru |
| title_sort |
mandatory severance pay : its coverage and effects in peru |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/06/1490131/mandatory-severance-pay-coverage-effects-peru http://hdl.handle.net/10986/19598 |
| _version_ |
1764440129168998400 |