Signaling in the Labor Market: New Evidence on Layoffs and Plant Closings
AbstractIn my asymmetric-information model of layoffs, high-productivity workers are more likely to be recalled to their former employer and may choose to remain unemployed rather than to accept a low-wage job. In this case, unemployment can serve as a signal of productivity, and duration of unemployment may be positively related to post-laid-off wages even among workers who are not recalled. In contrast, because workers whose plant closed cannot be recalled, longer unemployment for them should not have a positive signaling benefit. Analysis of the data from the January 1988-2000 Displaced Workers Supplements to the Current Population Survey reveals that the wage/unemployment duration relation differs between laid-off workers and workers displaced through plant closings in the predicted way, and finds evidence consistent with asymmetric information in the U.S. labor market.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1009.
Length: 61 pages
Date of creation: Feb 2004
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Other versions of this item:
- Nuria Rodriguez-Planas, 2003. "Signaling in The Labor Market: New Evidence On Layoffs, and Plant Closings," William Davidson Institute Working Papers Series 2003-610, William Davidson Institute at the University of Michigan.
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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