The paper proposes the principles which should guide the design of a compensation package for redundant workers following a program of voluntary retrenchment. It is argued that the compensation should be equal to the opportunity cost of leaving the enterprise. Using a simple specification for the opportunity cost, a payment schedule is derived and simulated for the case of Sri Lanka.
Fiszbein, A. (2016). An opportunity cost approach to redundancy compensation: An application to Sri Lanka. Estudios De Economía, 21(3), pp. 113–126. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40934
