Seniority and efficiency

Article Abstract:

Seniority as an endogenous factor in compensation and employment arrangements between a firm and its labor pool is analyzed. Results show that seniority emerges as a first-best feature in cases of transitory shocks where efficient reallocation of labor is necessary. Conditions introduced in the model include nonseparable preferences over time and learning-by-doing, which imply that with seniority comes an increase in efficiency which promotes productivity despite the higher costs incurred for maintaining senior workers.

Economic aspects, Industrial efficiency, Economic efficiency, Employee seniority, Seniority

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Just, unjust, and just-cause dismissals

Article Abstract:

An efficiency wage model, which allowed just and unjust dismissals in employment, showed that a just-cause law improved job security and workers' welfare. It also showed greater efficiency and growth of firms because of reduced incidences of hiring and firing. The model used was derived from Shapiro and Stiglitz' one-period model of analyzing the effects of just-cause employment laws by determining a firm's profit maximizing security and wages measures to workers' opportunity costs.

Business Personnel Management, Human resource management, Wage payment systems, Job security, Employee dismissals, Employment terminations, Employment at will

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