Mandatory severance pay : its coverage and effects in Peru

In Peru, as in many other developing countries, employers have the legal obligation to compensate workers who are dismissed through no fault of their own. Is this an efficient mechanism for providing income support to the unemployed? The authors seek an answer to this question, using individual records from a household survey with a panel structure. Relying on five coverage indicators, they show that roughly one in five workers in the private sector, and one in three wage earners in the private sector, is legally entitled to severance pay. Coverage is more prevalent among wealthier workers. Results based on several empirical strategies suggest that workers"pay"for their entitlement to severance pay through lower wages. Consumption among unemployed workers who receive severance pay is 20 to 30 percent greater than among those who do not. Consumption among these workers is actually higher than consumption among employed workers, suggesting that mandatory severance pay is overgenerous in Peru.Public Health Promotion,Labor Policies,Social Protections&Assistance,Wages, Compensation&Benefits,Environmental Economics&Policies,Wages, Compensation&Benefits,Environmental Economics&Policies,Health Monitoring&Evaluation,Social Protections&Assistance,Inequality

General analysis of the governmental perceptions and policies in Latin America and the Caribbean

El estudio proporciona un análisis de las percepciones de los gobiernos sobre la situación demográfica y de las políticas gubernamentales implementadas por los países de América Latina y el Caribe en el campo de la población. El énfasis se sitúa en el crecimiento demográfico, a nivel de la mortalidad y acceso a servicios anticonceptivos. Previo la descripción de la situación regional , el análisis releva la evolución de las percepciones y políticas entre 1980 y 1991, incluyendo una discusión detenida tanto de las variables objeto de políticas como de la demografía de los países de la región

Mandatory Severance Pay: Its Coverage and Effects in Peru

compensate workers who are dismissed due to no fault of their own. Is this an efficient mechanism to provide income support to the unemployed? This paper seeks an answer to this question using individual records from a household survey with a panel structure. Relying on five coverage indicators, the paper shows that roughly one in five private sector workers, and one in three private sector wage earners, is legally entitled to severance pay. Coverage is more prevalent among wealthier workers. Results based on several empirical strategies suggest that workers "pay" for their entitlement to severance pay through lower wages. Finally, consumption among unemployed workers who receive severance pay is 20 to 30 percent higher than among those who do not. Consumption among these workers is actually higher than among those who are employed, implying that mandatory severance pay is excessively generous in Peru

Determinants of Hourly Earnings in Ecuador: The Role of Labor Market Regulations.

Ecuadorian labor costs are said to be high because of the existence of many mandated benefits. Using the 1994 Living Standards Measurement Survey, the authors show that the effect of these benefits is actually mitigated by a reduction of base earnings, that is, of the foundation on which they are paid. The reduction is larger in the private than in the public sector and is negligible for unionized workers. The authors also show that, in spite of mandated benefits, interindustry wage differentials are comparable to those of Bolivia, a country characterized by 'flexible' labor markets but otherwise similar to Ecuador. Copyright 1997 by University of Chicago Press.