Let's go to court! Firing costs and dismissal conflicts

Author
Keywords
Abstract

In this paper we analyze court outcomes of dismissal conflicts for several countries. We
highlight two facts. First, the patterns found are extremely stable in every country over
time. Second, two types of patterns are found: either the workers win most of the cases, or
the worker and the firm win half the times each. We build a model of dismissal conflicts that
explains these facts. The gap between the severance pay for fair and unfair dismissals is a
key factor in the determination of such court outcomes. Those countries with a small gap
have outcomes in which the workers win most of the time, and the average cost of firing is
higher than in those countries with a smaller gap. This suggests that costly dismissals and
rigid employment protection legislation are not necessarily synonymous.

Year of Publication
2000
Number
444
Date Published
08/2000
Publication Language
eng
Citation Key
8164
URL
Working Papers