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Playing Hard to Get: Theory and Evidence on Layoffs, Recalls and Unemployment

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  • Nuria Rodriguez-Planas

Abstract

This paper is the first to present empirical evidence consistent with models of signaling through unemployment and to uncover a new stylized fact using the 1988–2006 Displaced Worker Supplement (DWS) of the Current Population Survey (CPS), namely that, among white-collar workers, post-displacement earnings fall less rapidly with unemployment spells for layoffs than for plant closings. Because high-productivity workers are more likely to be recalled than low-productivity ones, they may choose to signal their productivity though unemployment, in which case the duration of unemployment may be positively related to post-displacement wages. Identification is done using workers whose plant closed as they cannot be recalled, and no incentives to signal arise.
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Suggested Citation

  • Nuria Rodriguez-Planas, 1998. "Playing Hard to Get: Theory and Evidence on Layoffs, Recalls and Unemployment," Papers 0086, Boston University - Industry Studies Programme.
    • Handle: RePEc:fth:bostin:0086
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    Cited by:

    1. Nakamura, Emi, 2008. "Layoffs and lemons over the business cycle," Economics Letters, Elsevier, vol. 99(1), pages 55-58, April.

    More about this item

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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