and female-biased downsizing. Table 4 provides a breakdown of our sample along these lines. Voluntary downsizing is defined as any kind of non-compulsory labor downsizing where the worker chooses to leave, typically as a result of a monetary or non-monetary severance compensation package by the firm. Monetary packages are usually given as a function of two variables, wage and seniority. Typically, the older the worker and the higher the current wage the larger the severance package.'<sup>3</sup> Pension enhancements and similar benefits may also be included under this category. Non-monetary packages include any type of in-kind payment that range from training to any other similar enhancements to the safety net intended to help workers that leave, such as food and clothes.'<sup>4</sup> The type of targeting employed, if any, is another useful classification of labor downsizing. As mentioned above, three are considered in this paper: age-biased downsizing, skill-biased downsizing, and gender-biased downsizing. Age-biased downsizing includes any labor cut that used age as a reference. This type of downsizing may be applied in the context of voluntary or involuntary downsizing programs. In fact, while voluntary age-biased downsizing is found in nearly 34 percent of total downsizing cases (and 82 percent of total voluntary cases), this kind of downsizing is not limited to choice as it may be implemented by force, too. In fact, one-half of all the involuntary downsizing cases are age-biased. This is shown in Table 4. The most common age-biased downsizing programs are voluntary early retirement programs through pension enhancements, which, as it implies, target older workers. _1_<sup>_5_</sup> Mandatory retirement of a specific group of older workers is relatively common in developing countries, too.

Skill-biased downsizing includes any labor cut that uses any written or oral method, test, interview, or certification to measure skills or occupational ability as a retrenchment reference. Thus, skill-biased programs restrict the program along detailed occupational or skill groupings (Haltiwanger and Singh 1999). A typical example is to test workers on general or particular labor skills in order to decide whether or not to keep them. In recent years, the classic example of this is the Peruvian Tax Administration in the early 1 990s, which required all workers to pass a written test for workers to keep their jobs. Those workers that did not pass were fired and the new potential workers brought in to replace the old ones also had to pass a written exam. As a consequence of this, turnover in the Tax Agency reached about 30 percent. Another example is the case of the Central Bank of Ecuador. After a disastrous attempt to downsize using voluntary programs, the Central Bank decided to classify all its personnel in three categories: those who were essential for its functioning, those who were clearly redundant, and those for whom it was difficult to tell. This classification was based on the nature of the worker's unit and on the 13. Recent research proposes using compensation schemes based on additional characteristics of the individual or her household (such as education, gender, and others) and not just wage and seniority (Rama 1999; Chong and Rama 2001).

14. This last is not uncommon in African countries.

15. This program typically improves pension benefits if the worker retires earlier than the legal or agreed upon age. It has been applied widely in developing and developed countries.

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