Advanced Search
MyIDEAS: Login to save this paper or follow this series

Informational Externalities in the Labour Market and Their Implications for the Duration of Unemployment


Author Info

  • Ben Lockwood


This paper considers a matching model of the labour market where firms can get partial information about workers by testing them prior to hiring them. It is shown that firm's hiring decisions generate several external effects. The first is that by testing the average productivity of workers in the unemployment pool is lowered, which may lead to non-existence of equilibrium. The second is an informational externality; with testing, workers of different ability exit unemployment at different rates, and so unemployment duration is a signal of productivity. It is shown that in equilibrium, firm may wish to condition on duration, only hiring those workers whose duration is below a critical value. Equilibrium is generally inefficient, with too much testing, and too low a critical value for duration.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 740.

as in new window
Length: 44 pages
Date of creation: 1989
Date of revision:
Handle: RePEc:qed:wpaper:740

Contact details of provider:
Postal: Kingston, Ontario, K7L 3N6
Phone: (613) 533-2250
Fax: (613) 533-6668
Web page:
More information through EDIRC

Related research



No references listed on IDEAS
You can help add them by filling out this form.



This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:740. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.