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Higher Seminar in Economics | Mandatory Advance Notice of Layoff: Evidence and Efficiency Considerations with Arash Nekoei

Department of Economics welcomes you to a seminar with Arash Nekoei, Assistant Professor of Economics at Institute for International Economic Studies (IIES), Stockholm University.

Welcome to the Seminar in Economics organised by the Department of Economics, SSE. The seminar speaker is Arash Nekoei, IIES, SU.

Topic: Mandatory Advance Notice of Layoff: Evidence and Efficiency Considerations

Abstract

We investigate a prevalent, but understudied, employment protection policy: mandatory advance notice (MN), requiring employers to notify employees of forthcoming layoffs. MN increases future production, as notified workers search on the job, but reduces current production as they supply less effort. Our theoretical model captures this trade-off and predicts that MN improves production efficiency by increasing information sharing, whereas large production losses can be avoided by worker-firm agreements on side-payments – severance pay – in lieu of MN. We provide evidence of such severance increases in response to an extension of MN using novel Swedish administrative data. We then estimate the production gain of MN: extending the MN period leads to shorter non-employment duration and higher reemployment wages, plausibly driven by on-the-job search. Using variation in notice duration across firms, we estimate the productivity loss of notice. The estimates of benefits and costs suggest that MN has a positive net impact.

Arash Nekoei is Assistant Professor of Economics at Institute for International Economic Studies (IIES), Stockholm University. His research focuses on labor and public economics, in particular unemployment, immigration and inequality.

This seminar takes place in person at Stockholm School of Economics, Sveavägen 65, Room 350. 

Please contact kristen.pendleton@hhs.se if you have questions.

Dept. of Economics Labor Economics Seminar Seminar in economics

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