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Research On The Effect Of Dismissal Pay On The Labor Market

Posted on:2009-12-26Degree:MasterType:Thesis
Country:ChinaCandidate:H T ZhengFull Text:PDF
GTID:2167360242979452Subject:Labor relations
Abstract/Summary:PDF Full Text Request
The dismissal pay is one thing as which the state asks the employer to dispense lump sum payment to the discharged workers who have no fault.The costs of employment would increase as a result of it.Because the dismissal pay is the limitation of the state to the dismissal right of the employer,which effection would it make on the labor market? New-classic economists agued that the dismissal pay would make the firm leave some people unused,limit the flow of the labor force, weaken the efficency of the market and do harm to the economy wholly.For the system of market is the most efficent way on which we adjust and draw the labor force,and the employer and labor are both full of freedom and equality between them when trading.The costs of trade between the labor and the wage would be the lest as a result of it.Unless the employer sharing the freedom of dismissal fully,we can not make sure the efficency of labor market and production. But the labor market is not full of competion as a result of some things.And the labor relation is unequal between the capital and the labor. The cost of labor is not so much as that of the employer because of dismissal. Based on the debate of scholars on the dismissal pay . this paper tries to explore the system of effection of the dismissal in the labor market considering the current situation.Using the theoretical and practical analysis,the paper tries to make a research on the behavior rule of the employer and employee.It aims at proving the dismissal pay to be favor of the efficency of labor market,inducing the employer to view the dismissal pay rationally,and laying the theoretical foundation to speed up the settlement of the system of dismissal pay in the firm.In theory, though increasing the cost to some extent, the paper agues that the dismissal pay is not a bad thing to the firm on the economical analysis in the long view. On the assumption of the wage rigidity,the action that the employer provide the dismissal pay to the employee would decrease the number of dismissed employees.On the other hand ,that makes the employees with high transfer costs be willing to compensate those with low transfer costs in exchange for job rights, both could benefit from the trade ,and improves the effeciency of the labor market.The action that the employer fires his employees is made by himself unilaterally,but the employee could make some influence on the employer's decision.In the labor market ,the employee would consider the transfer costs when facing the dismissal.That made the employment become the dynamic process between the two parties.The dismissal pay would minimize both the private and social adjustment cost as a system.In practice,the paper explores the system of severance pay,the fact of wage,and the activities of labor market at first .After that,the paper views that the the level of wage makes a direct effect on the system of severance pay,and the low wage would decrease the standard of severance pay and attenuate the limitation to the firm.The actions that the firms decrease the level of wage and reject the payment of the dismissal wage can not maximize the profit.The employer must consider the supply and demand of the labor market as well as the transfer costs of employees to search for the balance between the payment of wage and the transfer cost of labor.When the labor have no strength to change the employer's payment of wage to them initiatively in some industries ,especially manufacturing,some of them with low transfer costs would transfer frequently.And the firm can not achieve the stabilization of employment.
Keywords/Search Tags:Dismissal Pay, Wage Rigidity, Labor Market
PDF Full Text Request
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