Layoffs and Lemons
AbstractWe provide theoretical and empirical analyses of an asymmetric-information model of layoffs. When firms have discretion with respect to whom to lay off, the market infers that laid-off workers are of low ability. Assuming that no such negative inference is warranted if workers are displaced in a plant closing, postdisplacement wages should be lower and postdisplacement unemployment spells should be longer for those displaced by layoffs than for those displaced by plant closings, but predisplacement wages should not differ by cause of displacement. Evidence on displaced workers from Current Population Surveys supports all three of our model's predictions.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 3442782.
Date of creation: 1991
Date of revision:
Publication status: Published in Journal of Labor Economics
Other versions of this item:
- G2 - Financial Economics - - Financial Institutions and Services
- G20 - Financial Economics - - Financial Institutions and Services - - - General
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Will Today's Unemployed Become Tommorow's Unemployable?
by Catherine Rampell in Economix on 2010-12-02 15:34:00
by himaginary in himaginaryの日記 on 2010-12-15 08:00:00
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