Sectoral Employment and Cyclical Fluctuations in an Adverse Selection Model
AbstractA model of self-selection in the labor market in the presence of private information is developed. The model is used to explain the correlation between the unemployment rate and the sectoral composition of employment first observed by D. M. Lilien (1982). The model also generates a (nonexploitable) Phillips curve and is consistent with observed correlations between hours and productivity. In addition, it is consistent with microeconomic evidence on the behavior of sectoral wage dispersions over the cycle and the absence of cyclicality associated with 'industry switching.' Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 36 (1995)
Issue (Month): 2 (May)
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Other versions of this item:
- Smith, B.D., 1990. "Sectoral Employment And Cyclical Fluctuations In An Adverse Selection Model," RCER Working Papers 218, University of Rochester - Center for Economic Research (RCER).
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