Sectoral Employment And Cyclical Fluctuations In An Adverse Selection Model
AbstractA model of self-selection in the labor market in the presence of private information is developed. The model is used to explain the correlation between the unemployment rate and the sectoral composition of employment first observed by D. M. Lilien (1982). The model also generates a (nonexploitable) Phillips curve and is consistent with observed correlations between hours and productivity. In addition, it is consistent with microeconomic evidence on the behavior of sectoral wage dispersions over the cycle and the absence of cyclicality associated with 'industry switching.' Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Bibliographic InfoPaper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 218.
Length: 26 pages
Date of creation: 1990
Date of revision:
Contact details of provider:
Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.
employment ; business cycles ; adverse selection ; consumption;
Other versions of this item:
- Smith, Bruce D, 1995. "Sectoral Employment and Cyclical Fluctuations in an Adverse Selection Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 261-81, May.
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- Paul Frijters, 1997. "Capital scarcities as a reason for high unemployment in the European Union," Macroeconomics 9706002, EconWPA.
- Joydeep Bhattacharya & Shankha Chakraborty, 2005.
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- Shankha Chakraborty & Joydeep Bhattacharya, 2004. "What do information frictions do?," Econometric Society 2004 North American Summer Meetings 41, Econometric Society.
- Bhattacharya, J. & Chankraborty, S., 2003. "What do Information Frictions Do?," Discussion Paper 2003-21, Tilburg University, Center for Economic Research.
- Bhattacharya, Joydeep & Chakraborty, Shankha, 2003. "What Do Information Frictions Do?," Staff General Research Papers 10254, Iowa State University, Department of Economics.
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NBER Working Papers
5951, National Bureau of Economic Research, Inc.
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