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Search Unemployment with Advance Notice

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  • Garibaldi, Pietro

Abstract

This paper proposes and solves a search unemployment model in which job separation requires mandatory notice. When jobs are subject to idiosyncratic uncertainty, firms would issue advance notice even with good business conditions. We show that such precautionary policy is not pursued if it entails sufficiently high productivity losses. If workers can search on the job, an increase in advance notice increases job-to-job movements, reduces unemployment flows, and has ambiguous effects on equilibrium unemployment. Results are consistent with the fact the North American and European labor markets, despite their differences in job security provisions, experience similar turnover rates and dissimilar unemployment flows.

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File URL: http://www.cepr.org/pubs/dps/DP2164.asp
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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2164.

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Date of creation: Jun 1999
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Handle: RePEc:cpr:ceprdp:2164

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Related research

Keywords: Advance Notice; Search Theory; Unemployment Flows;

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Cited by:
  1. Boeri, Tito & Garibaldi, Pietro, 2002. "Shadow Activity and Unemployment in a Depressed Labour Market," CEPR Discussion Papers 3433, C.E.P.R. Discussion Papers.
  2. Sunde, Uwe, 2002. "Unobserved Bilateral Search on the Labor Market: A Theory-Based Correction for a Common Flaw in Empirical Matching Studies," IZA Discussion Papers 520, Institute for the Study of Labor (IZA).

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