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Working Papers

Multiple Equilibria in a Firing Game with Impartial Justice

Year
2007
Authors
VRANCEANU Radu, BESANCENOT D.
Abstract
In many European countries, a majority of employees are hired under very protective labor contracts that restrict the ability of the employer to dismiss them. In particular, employees can take to courts the firm’s layoff motive. This paper analyses the interaction between firms, employees and the labor judicial system specific to South European countries. If judges’ error margin increases when the judicial system is subject to congestion, the game presents multiple equilibria which differ in the frequency of workers abusively fired for personal motives. Policy implications can be inferred.
BESANCENOT, D. et VRANCEANU, R. (2007). Multiple Equilibria in a Firing Game with Impartial Justice. ESSEC Business School.
Keywords
Coût de licenciement, Equilibres multiples, Juges du travail, Motif de licenciement, Protection légale de l’emploi