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Worker Turnover And Unemployment Insurance

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  • Sekyu Choi
  • Javier Fernández‐Blanco

Abstract

This article studies a competitive search model of the labor market with learning about match‐specific productivity in which risk‐averse workers factor present and future unemployment risks in their search decisions. We examine internally efficient equilibrium allocations in which match termination occurs only if the joint value of a worker–firm pair is negative. Internal efficiency poses a trade‐off between present and future risks. Public insurance provision also affects this trade‐off and, hence, worker turnover and job composition. In addition to unemployment benefits, the implementation of the planner's allocation requires a negative income tax and a 0 layoff tax.

Suggested Citation

  • Sekyu Choi & Javier Fernández‐Blanco, 2018. "Worker Turnover And Unemployment Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(4), pages 1837-1876, November.
    • Handle: RePEc:wly:iecrev:v:59:y:2018:i:4:p:1837-1876
    DOI: 10.1111/iere.12322
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    Cited by:

    1. Pagano, Marco & Picariello, Luca, 2023. "Talent discovery, layoff risk and unemployment insurance," European Economic Review, Elsevier, vol. 154(C).
    2. Ruy Lama & Gustavo Leyva & Carlos Urrutia, 2022. "Labor Market Policies and Business Cycles in Emerging Economies," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 70(2), pages 300-337, June.

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