The Firing Cost Implications of Alternative Severance Pay Designs

Economists have concerns about the firing cost implications of mandated severance plans. Analysis reveals that predicted severance plan consequences depend critically on the precise structure of the plan. Whether governments mandate (i) severance insurance plans or (ii) severance savings plans is important; savings plans have no "firing cost" effects on employer layoff decisions. The firing cost implications of insurance plan are sensitive to the types of job separations that qualify a worker for benefits. Plans that pay benefits across all separations are functionally severance savings plans. The variety of plan types is illustrated using U.S. and international examples.job displacement, worker turnover, severance pay, firing costs

Double-Sided Moral Hazard in Job Displacement Insurance Contracts

Job displacement insurance typically includes both unemployment benefits and lump-sum severance pay, and each has provoked policy concerns. Unemployment insurance concerns have centered on distorted job search/offer acceptance decisions by the worker, severance-induced firing cost concerns on excessive labor hoarding by firms. A single period private contracting model is used to investigate the interaction of these two seemingly distinct issues. Viewed singly, familiar results emerge. The absence of separation benefits of any kind leads to excessive labor hoarding as a primitive form of earnings insurance. In a limited information environment, the distribution of job displacement insurance between the two benefit types becomes important. Unemployment insurance benefits must be limited (relative to first-best levels) and severance pay made more generous. Firing cost considerations are less familiar. Because the firm wants to provide benefits, they cannot be "contracted around." Although formally driven by the sum of (unsubsidized) severance pay and expected unemployment benefits, the second-best firing cost program limits severance pay only. Together the two constraints create an unpromising contracting environment. The firing cost constraint is the more easily relaxed by government action – subsidies of sufficient size to one or another of the separation programs will work. Offer acceptance requires restrictions on leisure (workfare). Unfortunately, if first-best benefits are mandated, efficiency requires that both be eased.job displacement, unemployment insurance, severance pay, moral hazard, firing costs

Economic Well-Being and Child Labor: The Inter action of Family and Industry

How did industrialization in the nineteenth century affect the well-being of children among American working class families? Two revealing surveys from 1890 and 1907 are used to examine the implications of child labor on schooling decisions and on possible offsetting intrafamily transfers, in the form of current "retained" earnings or future asset transfers. Both issues are analyzed within the context of a formal model of family labor supply, in which returns to schooling accrue after the youth has left the household and thus the interests of the parents and the child need not coincide. Parents working in the industries examined did not, it appears, compensate their children for the reduced future earnings implied by child labor, in either the current or in future time periods. But, in addition, the migration of families in which parental altruism was weak may have eliminated much of the apparent increase in family income due to higher child earnings. We end with a note reconciling our findings with the long term trend away from child labor.

Voluntary Public Unemployment Insurance

Voluntary public unemployment systems are limited to a handful of countries, including Finland, Sweden, and, more substantially, Denmark. A voluntary system has the positive feature of other user-cost schemes, potentially efficient targeting of services. This presumes rational behavior as well as reasonable risk rating of premiums and the absence of worker access to alternative social programs. Using a 10 per cent sample of the Danish population drawn from administrative data, we exploit the voluntary Danish system to explore the structure of unemployment insurance demand. The insurance take-up rate is surprisingly high, 80 percent in 1995, but varies systematically with economic incentives in a way that raises doubts about the targeting value of the current system. Political support for the Danish system may derive instead from the fact that a universal, compulsory system would generate rather modest additional net funds and with a twist--additional revenue would come disproportionately from low-wage workers.

Voluntary Public Unemployment Insurance

Voluntary public unemployment systems are limited to a handful of countries, including Finland, Sweden, and, more substantially, Denmark. A voluntary system has the positive feature of other user-cost schemes, potentially efficient targeting of services. This presumes rational behavior as well as reasonable risk rating of premiums and the absence of worker access to alternative social programs. Using a 10% sample of the Danish population drawn from administrative data, we exploit the voluntary Danish system to explore the structure of unemployment insurance demand. The insurance take-up rate is surprisingly high, 80 percent in 1995, but varies systematically with economic incentives in a way that raises doubts about the targeting value of the current system. Political support for the Danish system may derive instead from the fact that a universal, compulsory system would generate rather modest additional net funds and with a twist--additional revenue would come disproportionately from low-wage workers.

Rotary Series Elastic Actuator

A rotary actuator assembly is provided for actuation of an upper arm assembly for a dexterous humanoid robot. The upper arm assembly for the humanoid robot includes a plurality of arm support frames each defining an axis. A plurality of rotary actuator assemblies are each mounted to one of the plurality of arm support frames about the respective axes. Each rotary actuator assembly includes a motor mounted about the respective axis, a gear drive rotatably connected to the motor, and a torsion spring. The torsion spring has a spring input that is rotatably connected to an output of the gear drive and a spring output that is connected to an output for the joint

Rotary Series Elastic Actuator

A rotary actuator assembly is provided for actuation of an upper arm assembly for a dexterous humanoid robot. The upper arm assembly for the humanoid robot includes a plurality of arm support frames each defining an axis. A plurality of rotary actuator assemblies are each mounted to one of the plurality of arm support frames about the respective axes. Each rotary actuator assembly includes a motor mounted about the respective axis, a gear drive rotatably connected to the motor, and a torsion spring. The torsion spring has a spring input that is rotatably connected to an output of the gear drive and a spring output that is connected to an output for the joint

Tensile Fracture of Welded Polymer Interfaces: Miscibility, Entanglements and Crazing

Large-scale molecular simulations are performed to investigate tensile failure of polymer interfaces as a function of welding time $t$. Changes in the tensile stress, mode of failure and interfacial fracture energy $G_I$ are correlated to changes in the interfacial entanglements as determined from Primitive Path Analysis. Bulk polymers fail through craze formation, followed by craze breakdown through chain scission. At small $t$ welded interfaces are not strong enough to support craze formation and fail at small strains through chain pullout at the interface. Once chains have formed an average of about one entanglement across the interface, a stable craze is formed throughout the sample. The failure stress of the craze rises with welding time and the mode of craze breakdown changes from chain pullout to chain scission as the interface approaches bulk strength. The interfacial fracture energy $G_I$ is calculated by coupling the simulation results to a continuum fracture mechanics model. As in experiment, $G_I$ increases as $t^{1/2}$ before saturating at the average bulk fracture energy $G_b$. As in previous simulations of shear strength, saturation coincides with the recovery of the bulk entanglement density. Before saturation, $G_I$ is proportional to the areal density of interfacial entanglements. Immiscibiltiy limits interdiffusion and thus suppresses entanglements at the interface. Even small degrees of immisciblity reduce interfacial entanglements enough that failure occurs by chain pullout and $G_I \ll G_b$