Vodopivec, MilanHolzmann, Robert2012-03-192012-03-192012978-0-8213-8849-5https://hdl.handle.net/10986/2369Throughout the developed and developing world there is growing demand for policies that would facilitate access to jobs by the most vulnerable, improve their earnings, and reduce their dependency on public support. As a result, governments are increasingly focused on removing obstacles faced by employers to create jobs and on instilling incentives for individuals to re-enter the labor market or to move toward more productive employment possibilities. Severance pay a program compensating formal workers for dismissal by employers or with an end-of-service benefit is often blamed for distorting employer hiring and firing decisions. Together with restrictive labor market regulations and other formal labor market features, this program is held responsible for excessive job protection with a negative impact on labor market outcomes, in particular affecting the most vulnerable. Despite this strong negative assessment among many labor market economists, surprisingly little is known about this program that exists in most countries around the world as a legally mandated benefit. This lack of knowledge may derive from the special 'positioning' of the program between labor code and social insurance; its origins were in the first policy domain, but its objectives for key programs were replicated in the second domain in particular unemployment and retirement benefits. This is the first-ever book to shed light on this program in a comprehensive manner its historical origins, its rationale, and its characteristics across the world. It reviews the soundness of the empirical accusation, assesses recent country reforms, and offers policy reform alternatives and policy guidance. The policy directions include folding severance pay into existing social insurance programs, where they exist, and to make severance pay contractual between market partners as a way to enhance efficiency in a knowledge-based economy. Folding severance pay into employment benefits may also be an opportunity to move away from unemployment insurance, which is fraught by moral hazard, toward a promising 'hybrid' system of unemployment insurance savings accounts supplemented by social pooling.CC BY 3.0 IGOACCOUNTINGADDITIONAL INCOMEADEQUATE INCOMEADMINISTRATIVE COSTSADVERSE EFFECTSAFFECTED WORKERSAMOUNT OF CONTRIBUTIONSANNUAL INTEREST RATEANNUAL RETURNSANNUAL SALARYAVERAGE BALANCEAVERAGE INTERESTAVERAGE INTEREST RATEAVERAGE WAGEBANK LENDINGBANKING SYSTEMBANKRUPTCYBANKSBARGAINING AGREEMENTBENEFICIARIESBUSINESS CYCLECALCULATIONCAPITAL ACCUMULATIONCAPITAL INVESTMENTSCASH TRANSFERCASH TRANSFERSCHILD LABORCOLLECTIVE BARGAININGCOMMUNITY DEVELOPMENTCOMPANY PENSIONCONTRACT LABORCREDIT UNIONSCREDITSCUSTOMER SERVICESDEBTSDEPOSITDEPOSITSDEVELOPMENT BANKDEVELOPMENT ECONOMICSDISABILITIESDISABILITYDISABILITY INSURANCEDISMISSALDISPLACEMENTDOMESTIC WORKERSEARNINGSEARNINGS-RELATED PENSIONECONOMIC DOWNTURNSECONOMIC SHOCKSEMPLOYEEEMPLOYEREMPLOYER CONTRIBUTIONEMPLOYER CONTRIBUTIONSEMPLOYERSEMPLOYMENT OPPORTUNITIESEXPENDITURESFAMILY MEMBERFINANCESFINANCIAL DIFFICULTIESFINANCIAL INSTITUTIONSFINANCIAL MANAGEMENTFINANCIAL MARKETSFINANCIAL SUSTAINABILITYFIRING COSTFIRING COSTSFIRM SIZEFLEXIBLE LABOR MARKETSFORCED SAVINGSFUND MANAGEMENTHOME IMPROVEMENTHUMAN CAPITALINCOMEINCOME DISTRIBUTIONINCOME SOURCESINCOME SUPPORTINCOME SUPPORT PROGRAMSINCOME SUPPORT SYSTEMSINDIVIDUAL ACCOUNTINDIVIDUAL ACCOUNTSINDIVIDUAL PENSIONINDIVIDUAL SAVINGSINFLATIONINFORMAL ECONOMYINFORMAL LABOR MARKETSINFORMAL SECTORINSURANCE COMPANIESINSURANCE POLICIESINSURANCE SCHEMEINSURANCE SCHEMESINTEREST RATESINVENTORYINVESTINGINVOLUNTARY UNEMPLOYMENTJOB CREATIONJOB LOSSJOB MARKETJOB SEARCHJOB SECURITYJOB SEPARATIONJOB TENUREJOB TRAININGJOBSLABOR CONTRACTLABOR CONTRACTSLABOR COSTSLABOR ECONOMICSLABOR FORCELABOR LAWSLABOR LEGISLATIONLABOR MARKETLABOR MARKET CONDITIONSLABOR MARKET PERFORMANCELABOR MARKET POLICIESLABOR MARKET REFORMLABOR MARKET REFORMSLABOR MARKET REGULATIONLABOR MARKET REGULATIONSLABOR MARKETSLABOR MOBILITYLABOR PRODUCTIVITYLABOR REGULATIONLABOR REGULATIONSLABOR RELATIONLABOR SUPPLYLABOURLABOUR ADJUSTMENTSLABOUR CONTRACTSLABOUR MARKETLABOUR MARKETSLIABILITYLIVING STANDARDSLOANLOW INCOMELOW INCOMESLOW UNEMPLOYMENTLOW-INCOMELUMP SUMMANDATED BENEFITSMANDATORY SAVINGSMANDATORY SEVERANCEMARKET TRENDSMARKET TURNOVERMAXIMUM CONTRIBUTIONSMINIMUM BENEFITSMINIMUM CONTRIBUTIONSMINIMUM PAYMENTSMINIMUM WAGEMINIMUM WAGESMONITORING COSTSMONTHLY INCOMEMORAL HAZARDMORTGAGEMORTGAGE PAYMENTSPENSIONPENSION FUNDPENSION FUND ADMINISTRATORSPENSION FUNDSPENSION PLANSPENSION REFORMPENSION REFORMSPENSION RIGHTSPENSION SCHEMESPENSION SYSTEMSPENSIONSPOOL OF FUNDSPRELIMINARY RESULTSPRIME AGEPRIVATE FINANCIAL INSTITUTIONPRIVATE SECTORPROGRAM DESIGNPROPERTY TAXPUBLIC ECONOMICSPUBLIC PENSIONPUBLIC WORKSPURCHASING POWERRATE OF RETURNRATE OF RETURNSRATES OF RETURNRENTSRETIREDRETIREMENTRETIREMENT ACCOUNTSRIGID LABOR MARKETRISING UNEMPLOYMENTRISING UNEMPLOYMENT RATERISK MANAGEMENTSAFETYSAFETY NETSAFETY NETSSALARYSAVINGS ACCOUNTSAVINGS ACCOUNTSSEVERANCE PAYSEVERANCE PAY SYSTEMSEVERANCE PAYMENTSEVERANCE PAYMENTSSOCIAL ASSISTANCESOCIAL FUNDSOCIAL FUNDSSOCIAL INSURANCESOCIAL PROTECTIONSOCIAL SECURITYSOCIAL SERVICESSOURCE OF INCOMESOURCES OF INCOMETEMPORARY WORKERSTERMINATIONTREASURY BONDSUNEMPLOYEDUNEMPLOYED WORKERSUNEMPLOYMENTUNEMPLOYMENT ASSISTANCEUNEMPLOYMENT BENEFITSUNEMPLOYMENT DURATIONUNEMPLOYMENT INSURANCEUNEMPLOYMENT INSURANCE PROGRAMUNEMPLOYMENT RATESVALUATIONVOLUNTARY CONTRIBUTIONSWAGE GAPWAGE INCREASEWITHDRAWALWORKERWORKERSWORTHYOUNG WORKERSYOUTH EMPLOYMENTWorld Bank10.1596/978-0-8213-8849-5